What is the SMSF Annual Return Rounding Amount?
The SMSF Annual Return Rounding amount appearing in The Statement of Taxable Income (SOTI) is a result of rounding differences between the SOTI and the SMSF Annual Return. The SOTI will force the taxable income of the fund to be the same as the SMSF Annual Return.
See the example below for more information on how you can reconcile this amount.
- Statement of Taxable Income
- Tax Reconciliation Report
Locating the Problem
View the SMSF Annual Return Rounding amount from the Statement of Taxable Income.
SMSF Rounding Amount* = Taxable Income less Benefits accrued Add Total of Less items Less Total of Add items
(*This should be equal to the difference between unrounded amounts in the Operating Statement and the truncated amounts in the SMSF Annual Return. )
In the example below this is equal to $2,544 - $10,297.51 + $9,367.19 - $1,617.96 = $(4.28)
Generate the Tax Reconciliation Report and sum up the rounding amounts (noted as "Ignore Cents") for Income and Deduction items. Be careful not to double count items such as Foreign Income, Contributions, Gross Income etc. where there is a sub-total.
In the example below ($) 0.59 + 0.44 + 0.43 +0.88 + 0.95 + 0.99 = 4.28 which is equal to the rounding amount in the SOTI.
If this calculation is not equal to the rounding amounts noted in the SOTI, it indicates an error. Contact BGL Support on 1300 654 401 for further assistance.
The SMSF Annual Return Rounding amount could be caused by one or more of the following issues:
**Right Click on any image to open in a new tab
To identify if this is the issue: Navigate to Accounting | Transaction List and filter the 24800 accounts using the search bar.
Note those transactions where the 24800 account is recorded along with 24700 account in a single transaction. Example: (*Right click the image to open in a new tab)
Once the issue is identified, reverse entries, and split the transactions between the 24800 and 24700 accounts. Example:
|DR 24800 Changes in Market Values of Other Assets|
|DR 24700 Changes in Market Values of Investments|
Once split, re-create entries.
Where the user has entered a manual revaluation to an Investment Account (70000 range), there must be a corresponding amount to account 24700. If there isn't a corresponding entry, the revaluation will be added to the rounding amount.
You may have done this unintentionally. For example, trying to enter a cost base adjustment where inputting "0" in the Units field is required however this field was left blank.
A previous issue existed in the transaction matching process where dividend, contribution and interest transactions are missing tax data.
- For interest transactions, check if the total interest amount in the operating statement is equal to the total interest amount in the annual return.
- For dividend transactions, check if the total dividend amount in the operating statement is equal to the total franked + unfranked + foreign income from dividends in the annual return.
- For employer contribution transactions, check if the total contribution amount in the operating statement is equal to the total assessable contributions in the annual return plus non-assessable contributions in the SOTI.
If any of the above transaction issues occur, you will need to adjust the individual transactions (editing the affected transactions and changing data that is missing in the More Details Panel). You may then re-create entries. Contact BGL Support on 1300 654 401 for further assistance.
Review the Interest Income Reconciliation Report for amounts that may have a discrepancy. These transactions will then need to be edited and the Gross Interest updated to match the bank amount.
Review the Dividend Reconciliation Report for amounts that may have a discrepancy. These transactions will then need to be edited and the franked/unfranked fields updated to equate to the bank amount.
Any debit entries to 24200 will need to have the amount input as a negative in the More Details Panel. Review the 24200 transactions.
Transaction recorded to Account 25000 but nothing to the gross interest column. If there is no gross interest and only foreign income then this amount should be posted to the 23800 account.
When making adjustments, especially for tax components, you will need to first Reverse Entries.
Note: There is no issue with having multiple Create Entries throughout the year so long as the transactions within those Create Entries periods don’t change, as the taxable income calculations can change. If transactions within those create entries periods change, then users will need to recreate entries
To identify if this is the issue: From the Reports screen, view the Realised Capital Gains Report and Statement of Taxable Income.
The Realised Capital Gains in the Statement of Taxable Income should match the total figure of the Indexed, Discounted and Other Gains under the Tax Treatment heading of the Realised Capital Gains Report. If it does not match, the difference will cause a Rounding amount in the Statement of Taxable Income.
- If there is a variance, compare the Realised Capital Gains Report with the Market Movement Report.
- This time, look for variances with individual disposals. Work through the disposals, comparing the figures in each, until you find the mismatch.
- Once you have recognised the mismatch, open the Transaction List, and locate the transaction. Only when you edit the transaction and you will find the credits and debits are not matching. Correct the mismatching figures to balance the transaction.
Where discrepancies between the Realised Captial Gains Report and the Statement of Taxable Income are substantial, users may need to check the Chart of Accounts to see if investments have been rightly marked as "Assets subject to CGT".
Please further refer to help.