2016/2017 EOFY Processing Procedures - Multiple Pension Accounts Scenario

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Overview


Simple Fund 360 users can use the following instructions as a guide to complete the 2016/2017 year-end processing for funds affected by the Super Reforms with a member having multiple pension accounts.

Note

BGL do not provide accounting or taxation advice. The following is designed to act as a guide for Simple Fund 360 users. It is not designed to be accounting or tax advice and should not be taken as a strict guideline. Other methods that are more suitable may be used instead of these steps.

Scenario


In this example, the fund has two members.

Tony has three pension accounts totalling $2,537,813.59

The following is a summary of his pension accounts:

Tony Tax Free % Balance Reduction Balance
TONSOP00005P 11.58% $495,214.21 ($495,214.21) 0
TONSOP00006P 48.95% $1,069,934.09 0 $1,069,934.09
TONSOP00006P 40.00% $972,665.29 ($442,599.38) $530,065.91
Total   $2,537,813.59 ($937,813.59) $1,600,000.00

Carmela has a TRIS pension account of $457,155.45.

Step 1: Fund Processing 


This does not change from previous years.

  1. Ensure all transactions have been matched or have been entered in for 2016/2017.

  2. Enter all transactions which affect the Cost base for 2016/2017 e.g. Tax Deferred Distributions, Depreciation, Dividend Reinvestments and other Corporate Actions.

  3. All assets should have a Market Value as at 30/06/2017 (or CGT reset date if applicable).

Step 2: CGT Relief (if applicable) 


Determine if the fund is eligible for CGT relief. If not, go to Step 3.

  1. Unsegregated funds should apply for a Draft Actuarial Certificate and/or ensure the draft actuarial percentage has been entered in Fund Pension Policies screen for the 2016/17 Financial Year. This is to ensure the correct decisions are made when selecting which assets to apply relief to.  

  2. Enter CGT Reset Transactions and complete CGT Reset Documentation.

As the fund was in Pension mode for the full year, the draft actuarial percentage entered in the Fund Pension Policies is 100%.

Step 3: Comply with Transfer Balance Cap as at 30 June 2017


Before processing the commutation, Create Entries until 30/06/2017 to reflect updated Market values.

It is recommended that you select Yes next to Display Member Allocation Worksheet and then select Create Entries.

This is to allow you to take note of the profit and tax allocation figures for reconciliation purposes later.

For example:

Select Continue Create Entries to proceed.

In this scenario, we are going to process cash out transactions for Tony Soprano and pay out any balance over the $1.6m from his pension accounts.

You can generate the Member Summary Report to get the balance of each pension account.

For example:

Based on the Tax Free proportion, Tony is going to cash out the whole balance from Account TONSOP00005P (lowest Tax Free %) and part of Account TONSOP00007P to comply with the $1.6m balance cap.

From the Main Toolbar, go to Member.

Select Member list from the list.

Select Member Transactions and from the drop down list, select Internal Transfer/Commutation.

Next to the Select Transfer/Transaction Type heading, select Commute Pension Account from the drop down list.

Select the member undertaking the commutation and then select the pension account to commute. In this example, it is going to be for Tony Soprano and his pension accounts.

Input 30/06/2017 as the date of transfer. Select Cash Out and the relevant bank account.

The whole balance from Account TONSOP00005P will be cashed out.

Select the tab for Account TONSOP00007P.  Only part of the balance is required to be cashed out to comply with the $1.6m cap.

Click Save.

The following message will display.

Select Yes to confirm.

Select No to the Is this member going back into pension now? message.

 Step 4: Finalise Fund 


  1. Unsegregated funds need to apply for a FINAL Actuarial Certificate and/or ensure the actuarial percentage has been entered in the Fund Pension Policies screen for the 2016/17 Financial Year. This application will include all commutations made during the financial year including those made on 30/06/2017.

  2. If the Actuarial Percentage has not changed from Step 2, there is no need to reverse the last Create Entries.

  3. If the Actuarial Percentage has changed, you will need to update the Actuarial Percentage in the Fund Pension Policies screen for the 2016/2017 Financial Year.

  4. Reverse and recreate entries with the Display Member Allocation Worksheet option set to Yes.

  5. Review the allocations and ensure they are correct. You can compare it with the allocation figures from Step 3. If there are any profit/loss and tax allocated to the incorrect member, you can edit the allocations and select Continue Create Entries.
  6. Complete Fund Review ready for Audit.
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