Note: The Deferred Tax calculation has recently been improved.

This allows Simple Fund 360 to apply current year Tax Exempt Percentage (as per the Fund Pension Policy) to the Investment Market Movement for the lifetime of the fund.
This includes market movements occurring in prior years for all investments held in the current FY.

The calculation is now as follows:

Deferred Tax from Market Movement/Distributions =
((Market Movement * 2/3 ) + Current Year Tax Deferred from Distributions) * Tax Exempt %

Closing Balance in 89000/Deferred Tax Liability Account =
(Deferred Tax from Market Movement/Distributions * 15%)
less Total Capital and Tax Losses
adjusted for Deferred Tax Writebacks/Adjustments and carried forward Capital/Tax losses recouped
Adjustment posted to 89000/Deferred Tax Liability Account when creating entries =
Difference between Closing Balance and Opening Balance on the report, less Deferred Tax Writeback/Adjustment amounts (manual transactions posted to 89000 in all prior years).

The Deferred Tax Reconciliation Report has been added to assist you in reconciling the Deferred Tax Liability for a fund. You will need to ensure that Tax Effect Accounting has been ticked in Fund Details. The report will show:

Total Market Movement amounts for each investment;
Permanent (non-assessable) differences;
Temporary (timing) differences;
Any tax deferred distributions received;
Deferred tax balance accumulated from prior years.
Deferred tax closing balance for the year.

Tax Deferred amounts displaying in the report will not have the 33% discount applied. The Tax Deferred amounts are accounted for when the investment is disposed of. The Simple Fund 360 logic for CGT calculations is as follows:

1. The cost-base is decreased by the Tax-deferred amount;
2. The consideration less adjusted cost base = total capital gain;
3. The 33% discount is then applied to this total capital gain.

How to Prepare

From the Main Toolbar, go to Reports.
Select Reports.

On the left-hand side of the Reports screen, search for the Report.
Select the green arrow to add the report to the Report Pack List.
Select either Download PDF, Download Word or Download Excel.

You can also add this report to a Report Pack. See Reports for instructions.

Reconciling the Report

A fund using Tax Effect accounting will be able to generate a Deferred Tax Reconciliation report.

Instructions for the reconciliation of these amounts are split into two sections:

Report Amounts (the amounts that are used to calculate totals used in the summary)
Summary Amounts (the amounts that are used to calculate the closing Deferred Tax amount)

Reconciling the Report Amounts

Market Movement/Tax Deferred:

Market Movement for investments is calculated as follows:

Current Market Value of each investment less the cost of said investment.
(Market value as per in the Investment Security List)
This will include all relevant investments for the lifetime of that investment, as the Market Movement figures are re-calculated each year to account for changing Actuarial Percentages.

Tax Deferred Distributions are calculated through the following journals:

Tax-deferred posted in 23800 and 25000 journal components.
Only includes current FY journals.

Permanent Difference (Non-Assessable)

Permanent Difference (Non-Assessable) is 33% (1/3) of the Revaluation/Tax Deferred based on a discounted gain.

Temporary Difference (Assessable)

Temporary Difference (Assessable) is 66% (2/3) of the Revaluation/Tax Deferred.

Temporary Difference (Accumulation Portion)

Temporary Difference (Accumulation Portion) is the Temporary Difference (Assessable) adjusted by the Actuary Percentage of the year entered in the Fund Pension Policies screen.

This percentage is then applied to all Market Movements affecting included investments for the lifetime of the fund, meaning this Temporary Difference amount is recalculated each FY and is used to adjust the Deferred Tax total.

Reconciling the Summary Amounts

Deferred tax from Market Movement/Distributions

This amount includes all Temporary Differences that have accumulated, including Market Movements for the lifetime of the fund and Distributions for the current FY.

In other words:

Temporary Difference (Accumulation Portion) x Fund Tax Rate (commonly 15%)
= Deferred tax from Market Movement/Distributions.

The Temporary Differences included in this figure are:

Market Movement
Tax deferred distributions

Total Capital Losses

This amount is determined by multiplying the Net Capital Loss for the financial year mulitplied by the fund's tax rate:

= (Net Capital Loss) x (Fund Tax Rate)

The Net Capital Loss figure used can be found on the fund's Annual Return's CGT Schedule under Section 3 Label B

Total Tax Losses

This amount is calculated by multiplying the fund's Current Year Tax Loss by the fund's tax rate:

= (Current Year Tax Loss) x (Fund Tax Rate)

The Current Year Tax Loss figure can be found on the fund's Annual Return under Section C Label O

Deferred Tax WriteBacks/Adjustment

This figure is the sum of any non-system (manual) transactions posted to the Deferred Tax Liability Account (89000).

This figure includes all manual transactions to 89000 that have occurred in all prior years of the fund.

If the balance of the account is Credit, this will display as a positive number.

Capital Loss carried forward recouped

This figure is calculated by multiplying the fund's prior year capital losses applied to any gains in the current financial year by the fund's tax rate:

= (Total prior year net capital losses applied) x (Fund Tax Rate)

The total prior capital losses applied figure can be found on the fund's Annual Return's CGT Schedule under Section 2 Label C.

Tax Loss carried forward recouped

This figure is calculated by multiplying the fund's tax losses deducted for the current financial year by the fund's tax rate:

= (Total tax losses deducted) x (Fund Tax Rate)

The Total tax losses deducted figure can be found in the fund's Annual Return's Losses Schedule under Part F Label H

Closing Balance

The closing balance displayed here represents the closing balance for the 89000/Deferred Tax Liability Account.

Deferred Tax Asset/Liability Balance from prior years

This amount is the opening balance for the FY in the 89000/Deferred Tax Liability Account.

Deferred Tax Asset/Liability Adjustment for current year

This amount is used by Simple Fund 360, creating a system journal that adjusts the 89000/Deferred Tax Liability account to the correct closing value.

Note: This adjustment amount does not include manual transactions to the 89000 account (as outlined by *2 on the Deferred Tax Reconciliation Report).
This is because the manual transactions already adjust the closing balance of this account.

For example, here are a manual and system journal and the amounts they relate to on the report: