CHESS, share registers and brokers: simple ways to manage your financial administration

You have just purchased your very first ASX share and you feel like a legitimate investor. You know, someone who does things like ‘invest in their future’ and all that.

Unfortunately, you can’t burst the bubbles just yet because like everything, there’s a mountain of paperwork to sort through (sigh). Believe me, if you don’t fix some of these things in the beginning, it will make your life more difficult later on.

In this article, I’ll explain the main documents you’ll receive after buying a stock (or ETF), what you’ll need to set up in the share register, and the details you’ll need to keep track of it. ‘tax. time (I know, I know, it takes the fun out of it a bit).

What is a CHESS statement?

Let’s start with one of the first documents you’ll receive in the mail, because while you can buy stocks with the click of a button, it’s still a bit manual in the background.

CHESS (breaking that acronym won’t help, just know that it’s our Australian clearing system that settles sales of shares made through the ASX) will send you this statement by post, confirming that the shares have been sent to you assigned.

I always like to glance at this statement to double-check my details, but other than that I usually shred it after the pile has built up.

What is a share registry like Computershare & Link? Should I do something?

Now that you are a shareholder, you benefit from certain advantages, such as voting at annual general meetings (AGM), receiving dividends (if the board chooses to pay one) and get a copy of their annual report, although anyone can access it online, so you’re not that special. However, since your company is hopefully busy growing its business, it hands over all shareholder administration duties to an external share registry to handle the show.

Common names to be aware of here are Computershare, Link Market Services and BoardRoom, although there are smaller players as well.

The sharing registry will be your admin center, where you can do everything from configuration dividend reinvestment plans (DRP), vote and modify your communication preferences. You can also download the distribution and tax statements you will need at year-end.

Perhaps the most important thing you can do is make sure your Tax File Number (TFN) is on file, otherwise you could end up with withholding tax on dividends paid to you (and you will have to remember to claim it on your tax return).

Should I keep my paper statements?

You may also receive documents in the mail from your new share register asking for your payment, tax and communication preferences. It’s much easier to just go to the share log to update this information, but it’s perfectly acceptable to fill out and return these forms as well.

If you choose to continue to receive all your documents by post, you will just have to be very careful to update your address each time you move, otherwise you risk losing track of important details!

If you’re lucky, your broker can do the heavy lifting for you here and send your details to the share register, but that doesn’t always happen, so you should check anyway!

Stocks: should I keep something for tax?

This video explains 5 essential tips for investing in stocks, including managing dividends and tax.

Now the fun part. If you haven’t heard yet, you have to pay the tax on everything capital gains when you sell or receive a dividend from your shares in Australia.

I am used to it keep track of purchase date, purchase price, stock code and total purchase cost (base cost). I will also keep any statements I receive by email in a separate folder, so they can be accessed at tax time. You can also upload dividend statements to your share register account (once issued).

Common methods of tracking all of this for tax time include using Excel, Google Sheets, and Sharesight (my favorite).

Additional Resources

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