Australian custodian NAB Asset Servicing, a division of National Australia Bank (NAB), has implemented DST Global Solutions Investment Management Solutions’ (IMS) HiPortfolio propagation functionality for tax and accounting. Jointly developed by NAB and DST Global Solutions IMS, the administration enhancement will be used at a legal entity level for one of NAB’s largest superannuation fund clients in order to help optimise tax parcels and reduce the fund’s tax liability.
Ray Lester, general manager, delivery services and project sponsor at NAB, described the benefits of this first-to-market solution: “By working at the propagated level, tax parcels are chosen from a greater pool and can therefore be selected in a manner that produces a lower total capital gains tax figure. This enables us to maintain an advantageous tax position for our clients.
“Previously, sub-portfolios were created to allow investment decisions of a reporting entity to be delegated to their various investment managers. These were sub-sets of the total holding of the entity, and often individual managers would hold parcels of the same security as their counterparts,” he added. “Because of this segregation, parcel selection for capital gains tax was only able to be applied using the parcels available to each manager individually. Now, propagation will group the parcels of linked sub-portfolios and allow the tax allocation method to be applied to all parcels.”
The implementation is the culmination of a two-year software development project. NAB worked with DST Global Solutions IMS in its implementation. With the first successful implementation of its kind in Australia, NAB anticipates having a unique advantage in the competitive custody market. NAB is now looking to progressively roll-out the system across its entire client base as the potential tax savings through propagation for large superannuation funds are substantial.
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