Support Query

• Why is Simple Fund 360 calculating and allocating tax in periods without any income?
• Why does the Statement of Taxable Income not match tax figures represented in the Create Entries reports / system transactions?

Answer

The most common reason that tax is calculated in periods without income occurs when the details of a Fund Pension Policy are entered after creating entries partway through the year.

Simple Fund 360 will calculate and allocate a tax adjustment if a Fund Pension Policy is entered in the middle of processing a financial year. This is to ensure the total tax occurring in the financial year is based on this policy.

The following example outlines how processing could occur during the financial year:

Images taken from the Create Entries report

1. Create Entries processed for the 01/07/20XX - 01/01/20XX period
   • Income calculated as 100% taxable (No Fund Pension Policy Entered)
     
2. Fund Pension Policy created stating fund is 80% tax-exempt
3. Create entries processed for the 02/01/20XX - 30/06/20XX period
   • Any Income for this period is calculated as 80% tax-exempt
   • *Additional Tax Adjustment is calculated for the period in Step 1 at 80% tax-exempt
     
     

*This additional adjustment occurs during the final create entries period regardless of income recorded.

• In the above case, the total tax ($3,000) is adjusted by the 80% Fund Pension Policy (-$2,400)

The net of these figures ($600) will be displayed as the taxable income on the Statement of Taxable Income: