The Create Entries Process

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The create entries process is split into the following functions:

    • Automatic System Journals
    • Automatic Daily Journals
    • Year-End Create Entries

Automatic System Journals

Simple Fund 360 will automatically allocate any member transactions automatically to member's accounts upon saving the transaction without the need to run the Create Entries Process. These transactions will be directly allocated to the selected member account(s) and include: 

  • Contributions (Note: Contributions tax where applicable will be automatically calculated and allocated at the same time)
  • Pension payments
  • Lump Sum Payments
  • Lump Sums Rolled In
  • Internal Transfers
  • Pension Commencements
  • Pension Commutations
  • Insurance Proceeds
  • insurance Premiums

Automatic Daily Journals

Automatic Daily Journals are calculated by Simple Fund 360 on a daily basis and will complete the following (automatically):

  • Investment Revaluation journals - With the integration of BGL's ASX and UUT Automated Data Feed into Simple Fund 360, automatic investment revaluations are conducted on a daily basis. This will allow Simple Fund 360 to calculate the daily changes in market values of investments, which provides you access to real-time investment information.
  • Member Allocation journals - Income and expense transactions are allocated to members on a daily basis. This will allow Simple Fund 360 to calculate the daily profit/loss that is attributable to each member of the fund and provides you with real-time member balances.

Year-End Create Entries

 This needs to be activated by the Simple Fund 360 user at year-end and will:

  1. Finalise profit allocation to members and determine year-end balances as at 30 June;
  2. Finalise investment revaluations as at 30 June;
  3. Calculate PDIT/FITB (If the fund is applying Tax Effect Accounting);
  4. Offset any foreign, TFN and franking credits against Income Tax Payable;
  5. Determine the net capital gain;
  6. Calculate Income Tax Payable;
  7. Calculate the fund's Exempt Current Pension Income and non-deductible expenses;
  8. Calculate and populate the figures in the SMSF Annual Return and the ATO Schedules.

How does SF360 allocate profit/earnings to members? 


How does SF360 determine how much of the fund's earning's should be allocated to each member's account? 

  • The Create Entries Process will use the "daily weighted average balance" method when completing profit and tax calculations for members. 
  • The general profit/earnings allocation will include any non-member transactions such as investment market movement, dividends, distributions, interest and fund expenses such as accounting fees, audit fees, rental property expenses, depreciation and bank charges. 
  • The daily weighted average balance method ensures that each account receives an appropriate percentage of the profit (or loss) of the fund at year end. This method adds the total amount allocated to the member accounts for the year by placing a weighting on each dollar based on the transaction date (how many days the transaction was relevant to the financial year/period). The remaining profit (or loss) and income tax applicable to the fund is then allocated to member accounts based on the total of the weighted member account balances at year-end. 
  • Income Tax and PDIT will only be allocated to Accumulation Members only. Where the fund has only pension members any income tax will be allocated to all pension members. Imputed Credits will always be allocated as part of the profit allocation
  • To view the weightings determined by Simple Fund 360, you can prepare the Create Entries Report.
  • The member allocation worksheet allows users the ability to change the percentage or amount of profit/(loss) and income tax expense that is allocated to fund members. View Member Allocation Worksheet for further information

How does the Create Entries process allocate profit/earnings to Taxable and Tax-Free components?

  • Accumulation members will have their earnings posted to the Taxable Component.
  • Pension members will have their earnings proportioned between the Taxable and the Tax-Free components based on the Tax-Free proportion percentage.

 

How does the Create Entries process allocate profit/earnings to Preservation components?

The create entries process will allocate profit and tax to the various preservation components as follows:

  • Members share of profit/loss will be allocated to Preserved component when:

    • Member is in accumulation mode and is under 65. The system assumes they have not met any conditions of release.
    • Member is in pension mode, however, has a transition to retirement income stream. This is because "attaining preservation age" is not a condition of release with a "nil" cashing restriction (Refer to Superannuation Industry (Supervision) Regulations [SISR] subdivision 6.12 and SISR Schedule 1. Benefits transferred to a transition to retirement pension will retain the preservation status they had before they were transferred, i.e. unrestricted non-preserved, restricted non-preserved and preserved. A trustee may, however, change the preservation status of restricted and unrestricted non-preserved benefits to the preserved benefit. Once the member meets a condition of release with a "nil" cashing restriction e.g. turning 65, benefits may be transferred to Unrestricted Non-Preserved.


    Members share of profit/loss will be allocated to Unrestricted Non-Preserved component when:

    • Member is purely in pension mode (Pension is not Transition to retirement). Regardless of their age, the system assumes they have met a condition of release, therefore, all profit is allocated to Unrestricted Non-Preserved (UNP).
    • Member is in Accumulation mode and aged 65 or over. 

What are "segments" and how does the Create Entries use them?

  • Where member accounts commence (e.g. New Accumulation or Pension member) or a Member account ceases (e.g. pension ends or member leaves fund) the Create Entries process is separated into segments based on a key start and end date.
  • This ensures a fairer allocation of earnings to members for these periods as the Profit allocation will only be based on the weighted balance for that segment.
  • When an Actuarial Certificate is received only the last segment will need to be repeated with the Actuarial Percentage. The Create Entries process will automatically apply the proportions for the entire year and adjust the final segment.

Navigation


 

From the Main Toolbar, go to Compliance.

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Select Period compliance from the list.

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Workflow


The workflow timeline will provide an overview of: 

  • CE (Last Create Entries end date)
  • CP (Last Close Period end date)
  • LT (Last Transaction loaded date)

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How to complete the year-end Create Entries


Follow these steps to complete the year-end Create Entries:

 

  1. Under the Create Entries Period heading, input the full financial year of the fund. 
  2. Next, select Create Entries.

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  3. The Create Entries will appear in the Create Entries table below (select the image to enlarge it). 

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Member Allocation Worksheet


The member allocation worksheet allows users to the ability to change the percentage or amount of profit/(loss) and income tax expense that is allocated to fund members. See Member Allocation Worksheet for more information.

Use segregation for income allocation only


Simple Fund 360 supports segregation of assets for profit (or loss) allocation only. To adopt this setting you will need to create a Segregation Policy, and before the year-end Create Entries switch the Use segregation for income allocation only toggle to YES.

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All income tax related items will be calculated based on the proportionate method (unsegregated method). This allows you to allocate income from investments to specific member accounts while having income tax (ECPI, Foreign Tax credits, Foreign resident Withholding, Net capital gains and PDIT) calculated based on the proportionate method (actuaries). This is to provide you with greater flexibility in terms of investment choice and strategy, especially where members have exceeded their TSB of $1.6 million and a fund can no longer use a segregated methodology for tax purposes.

Example - The UFC Super Fund has two members Jon Jones (Account Based Pension) and Ronda Rousey (Accumulation Phase).

A segregation policy was created, 100% of BHP Shares (77600/BHP.AX) were allocated to Jon Jones.

The dividend for BHP (23900/BHP.AX) will only be allocated to Jon Jone's Balance. Exempt Current Pension income (ECPI) will be calculated using an Actuary Percentage.  

How to reverse or delete create entries


To remove the Create Entries, select Reverse Entries.

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If you have closed the period, the Reverse Entries option will not display. You will need to re-open the period first before being able to reverse entries. 

How to Input Prior Year Losses


  1. From the Create Entries screen, select View Losses.

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  2. You can then input any carried forward capital or tax losses.

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  3. Select Save after inputting the figures.

Create Entries Report


View the Create Entries Report to obtain a breakdown of the weighting calculations for each member, the profit allocations and tax allocations (to accumulation members).

Under the Report column of the year-end create entries, select the PDF icon.

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The member allocations can be found under the Segment Calculation section:

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Note: The Member Allocation Worksheet can be used to override the daily weighted average balance calculation.

 

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