Introduction to Capital Gains Tax API

This module covers the extract files for realised gains, unrealised gains, and parcel history for various events in security transaction parcels such as buy, sell, transfer, cost base adjustments, corporate actions, etc.

Click here to understand the terms and abbreviations used in this module.

The tax lot of a particular transaction holds various details which are used to calculate the portfolio’s capital gain when the tax lot is sold. The amount calculated for gain or loss is based on the market price and the cost base method. When the method is FIFO (First In First Out), the first tax lot is selected to be sold first until it is fully redeemed.

The Capital Gains Tax (CGT) API functionality sends the details of the realised gains when the sell transaction takes place, it sends the details of the unrealised gains when there is a price change and it will also send the tax lot parcel history. This information can then be used for reporting by the bank.

The APIs are created using the DFE framework which will extract an excel file containing the required details.

The benefits are as following:

• The details extracted can be used for reporting purposes for realised and unrealised gains or losses.
• Can be used for understanding the changes that the tax lot has gone through on a given day.
• Can be used for business validations and viewing the daily changes in tax lots.
• Can be used for defining the time per type of transaction such as buy, sell, etc.

Transaction Sequencing

The transaction sequencing is required in certain cases, where certain types of transactions (such as buy) need to be sequenced earlier for capital gain tax calculation purposes. Where multiple transactions take place during a day for the same portfolio and security, it is now possible to define the sequence in which the transactions will be considered for capital gain calculation purposes.

This functionality allows the user to define the time per type of transaction such as buy, sell, etc. which needs to be automatically populated in the application.

The AUCGTX.TXN.SEQUENCE.PARAM new application has been introduced and allows the user to configure the priority of updating the CG.TXN.BASE application.

The following new fields have been added to the DIARY and POSITION.TRANSFER applications:

• Cg Trd Time Cr: Captures the capital gains trade time for the credit leg. For DIARY that can have both debit and credit.
• Cg Trd Time Dr: Captures the capital gains trade time for the debit leg.

The SEC.TRADE,AUCGTX.TXN.SEQUENCE new version has been created as a copy of the SEC.TRADE,INPUT model bank version, where the Cg Trade Time and Cg Cust Trans Code new local fields are added.

CGT API Reconciliation and Recoverability

This functionality allows users to generate three capital gain reports for the unrealised gain or loss, realised gain or loss, and parcel history or tax lots history.

The existing Capital Gain Taxes (CGT) API extracts consider the parcels that have undergone a change in the last two years (YTD).