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 that have been in full pension up to 30 June 2017.
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.
The fund has two members and both of them have been in full pension mode up to 30 June 2017.
John Jones has a pension account with a balance over the $1.6m cap and will commute the excess amount to an accumulation account.
Mary Jones has a pension account with a balance under the $1.6m cap.
Step 1: Fund Processing
This does not change from previous years.
Ensure all transactions have been matched or have been entered in for 2016/2017.
Enter all transactions which affect the Cost base for 2016/2017 e.g. Tax Deferred Distributions, Depreciation, Dividend Reinvestments and other Corporate Actions.
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.
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.
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
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.
Select Continue Create Entries to proceed.
John Jones - Partial commutation to comply with Transfer Balance Cap as at 30 June 2017
In this scenario, John's pension balance is over the $1.6m cap. The excess will be commuted to a new accumulation for John Jones.
|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.
Input 30/06/2017 as the date of transfer and select New Accumulation Account.
In this example, John's current pension account balance is $2,812,887 which is $1,212,887 over the $1.6m cap.
This excess amount is going to be commuted to the new accumulation account.
Select No for Is the entire balance being taken out? and input the excess amount in the Specific amount field.
Click Save & Prepare Documents to prepare the commutation documents if required. Otherwise, click Save.
The following message will display.
Select No to the Is this member going back into pension now? message.
Step 4: Finalise Fund
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.
If the Actuarial Percentage has not changed from Step 2, there is no need to reverse the last Create Entries.
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.
Reverse and recreate entries with the Display Member Allocation Worksheet option set to Yes.
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.
Any tax has been moved to John's Accumulation Account.
Complete Fund Review ready for Audit