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Classification of ETF assets

An exchange-traded fund (ETF) is an investment fund traded on stock exchanges, much like stocks. As such, Mclowd users may be tempted to classify an ETF asset as a Direct Equity.

This will cause problems at end of year when Trust Distributions need to be entered, as Direct Equities do not appear in the Entity Selection List displayed on the Trust Distributions screen.

Although ETF assets are traded on the ASX, an ETF is structured, and correctly classified in Mclowd, as a Unit Trust. Although income from ETFs is essentially in the form of a dividend, income is earned by the ETF through a combination of investments yielding dividends, interest, capital gains, etc. This income is split across different categories for reporting purposes.

An ETF will issue an Attributed Managed Investment Trust Member Annual Tax Statement noting various components of attribution. These statements need to be processed in the same way as annual statements issued by Managed Funds and Unit Trusts, via the Mclowd Trust Distributions Table.

Accordingly, ETF assets should be classified as Trusts when entering the acquisition into Mclowd.

Enter all income from ETFs as Trust Distributions – exactly as you would enter income from a Unit Trust.