Overview
Tax Effect Accounting will create a provision for deferred income tax. When Tax Effect Accounting has been selected the create entries process will calculate the PDIT/FBIT for the fund and post an entry to account 89000 - Deferred Tax Liability.
The calculations will take into account whether the fund members are in Accumulation or Pension phase, and use the Segregation Policy or Pension Policy to adjust the tax provision.
Turn on Tax Effect Accounting
Tax Effect Accounting can be switched on or off from Fund Details | Reporting.
| From the Main Toolbar, go to Fund. |
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Select Fund details from the list. |
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Under Reporting, select Tax Effect Accounting.
Select Save.
Retroactive Tax Effect Accounting:
- If enabling Tax Effect Accounting for a fund for the first time, Simple Fund 360 will retroactively apply tax effect accounting to all of the fund's transactions since the fund's inception.
Automatic Write Back of Deferred Tax
Deferred Tax will automatically be written back for the full amount in any of the following situations:
- When the last recorded Fund Pension Policy is 100% (or if deemed segregation is in effect).
- The Tax Effect Accounting option in Fund Details is toggled off.
- The Fund has disposed of all assets/investments.
This automatic writeback occurs when creating entries for the financial year. Additionally, this automatic process can be disabled by selecting the relevant toggle in the Entity Details screen:
For more info on Writing Back PDIT refer to the following help: Writing back tax deferred amounts
To reconcile the Deferred Tax amounts, please refer to the following article: Deferred Tax Reconciliation Report