Accounting fees for dividend reinvesting

braddo2 · 21 May 2011

Hi,

I'm new to investing and have been buying small packets across various stock just to get my feet wet. I thought automatically reinvesting the dividends would be the wise thing to do but was shocked when I received my accountants bill.

They explained that reinvesting adds a lot more complexity to the accounting process and long story short I spent more money paying their bill than I got out of the shares.

Is that a fair statement on their behalf, or is my accountant having a lend of me? Admittedly the amounts invested are only small, but you've got to start somewhere.

How do I stop the re-investment now if I choose to? Is that controlled by my CHESS sponsor?

Your help is appreciated.

Tyler Durden · 21 May 2011

braddo2 said:
Hi,

I'm new to investing and have been buying small packets across various stock just to get my feet wet. I thought automatically reinvesting the dividends would be the wise thing to do but was shocked when I received my accountants bill.

They explained that reinvesting adds a lot more complexity to the accounting process and long story short I spent more money paying their bill than I got out of the shares.

Is that a fair statement on their behalf, or is my accountant having a lend of me? Admittedly the amounts invested are only small, but you've got to start somewhere.

How do I stop the re-investment now if I choose to? Is that controlled by my CHESS sponsor?

Your help is appreciated.

Can't help with the fees query, but you can normally log in to a site which allows you to elect to be in a dividend reinvestment plan or not. When you first bought your shares, you should've received a letter giving you the log in details.

skc · 21 May 2011

braddo2 said:
Hi,

I'm new to investing and have been buying small packets across various stock just to get my feet wet. I thought automatically reinvesting the dividends would be the wise thing to do but was shocked when I received my accountants bill.

They explained that reinvesting adds a lot more complexity to the accounting process and long story short I spent more money paying their bill than I got out of the shares.

Is that a fair statement on their behalf, or is my accountant having a lend of me? Admittedly the amounts invested are only small, but you've got to start somewhere.

How do I stop the re-investment now if I choose to? Is that controlled by my CHESS sponsor?

Your help is appreciated.

Dividend reinvestment does add extra work but shouldn't dramatically increase the fees. It isn't something so different or unique and your accountant should know how to handle them efficiently. You shouldn't have to pay for your accountant's incompetence. Plus it should only be more trouble when you sell.

To save on fees you can considering compiling the information yourself. Record each new reinvestment as a new buy with the date and price as you would do with a normal share purchase. When you sell, the only real issue is that some of your holdings may fall below the 1 year CGT discount threshold. It's really quite simple.

Look at your chess statement and see who is the share registry provider - usually Computershare or Link Market Services. Go to their website and you should be able to change the reinvestment preference there.

rnr · 21 May 2011

Equities that involve "stapled securities" require more time (i.e. fees) than FPO shares.

Infigen Energy (IFN) is one example that comes to mind which has 3 stapled securities and the cost base must be monitored for each of these entities.

Julia · 21 May 2011

After a bitter experience with an accountant from whom I only had a verbal quote for the work to be done and where she subsequently charged me double that amount, I now explain or show the work to be done to the accountant and get a written quote.

We tend not to do this with so called professionals, although we wouldn't get a job done by a tradie without a proper quote.

Accountants can charge varying amounts for the same job. In asking for quotes for tax return and audit of SMSF it has ranged from $850 to $2800.

danbradster · 21 May 2011

skc said:
Dividend reinvestment does add extra work but shouldn't dramatically increase the fees. It isn't something so different or unique and your accountant should know how to handle them efficiently. You shouldn't have to pay for your accountant's incompetence. Plus it should only be more trouble when you sell.

To save on fees you can considering compiling the information yourself. Record each new reinvestment as a new buy with the date and price as you would do with a normal share purchase. When you sell, the only real issue is that some of your holdings may fall below the 1 year CGT discount threshold. It's really quite simple.

Look at your chess statement and see who is the share registry provider - usually Computershare or Link Market Services. Go to their website and you should be able to change the reinvestment preference there.

It should increase the fees if you aren't keeping good logs yourself like a quality spreadsheet. My mother is a tax accountant and dividend re-investment does increase the time it takes to do the tax return...like she would have to look up the dividend dates and prices.

As long as you have a spreadsheet showing both your purchases and the dividend re-investment purchase prices, it'll be faster for the accountant.

My spreadsheet looks like this -

PHP:

DANIEL						No	Purchase Price	Total Cost	Brokerage	Total Cost		 Today's price 	Current Value	Profit / Loss			
AMA	Allomak	5/10/2010	42500	 $0.05 	 $1,997.50 	 $19.95 	 $2,017.45 		 $0.14 	 $5,737.50 	$3,720.05	184.39%			
OAK	Oaks Hotels	14/02/2011	6995	 $0.29 	 $1,993.58 	 $19.95 	 $2,013.53 		 $0.28 	 $1,958.60 	-$54.92	(2.73%)		
OAK	Oaks Hotels	15/02/2011	10000	 $0.30 	 $2,950.00 	 $-   	 $2,950.00 		 $0.28 	 $2,800.00 	-$150.00	(5.08%)		
OAK	Oaks Hotels	24/02/2011	41932	 $0.28 	 $11,740.96 	 $29.95 	 $11,770.91 		 $0.28 	 $11,740.96 	-$29.95	(0.25%)		
OAK	Oaks Hotels	1/03/2011	25248	 $0.28 	 $7,069.44 	 $19.95 	 $7,089.39 		 $0.28 	 $7,069.44 	-$19.95	(0.28%)

When you get a dividend you put a new row for the company showing the date, the price paid, the free brokerage.

Also you would have a section to track sales and cash dividends.

Accounting fees for dividend reinvesting

braddo2

Tyler Durden

skc

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rnr

Julia

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Accounting fees for dividend reinvesting

braddo2

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