How Supervisory Levy &  Prior Years Under/Over Provision are coded in SF360

The ATO Supervisory Levy is included when the income tax payment is made via the More Details Panel. This transaction can be recorded through the Transaction List or matched through Transaction Matching when using a bank feed. The process to complete both scenarios is the same (as the supervisory levy is recorded through the More Details Panel in both scenarios). 

In this example, the Transaction List will be used:

Instructions

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From the Main Toolbar, go to Accounting.
Select Transaction list
Select New Transaction.
Select Bank Statement.

 

From the Transaction List you can now record the Income Tax Payment.

Date	Input 21 Jan 2016
Reference	Input 33
Description	Input Income Tax Payment
Select an account	Select Account 85000 - Income Tax Payable
Amount	Input a debit amount of $8,321.00
More details	Click to open the more details panel.
Tax Instalment Details	Set the financial year to 2014-15
SMSF Supervisory Levy	This will automatically set to $259.00 based on the financial year.
Under/over provision for Income Tax	Input 493.00

Select Post to save the transaction.

 

Simple Fund 360 will now post the following transactions:

Account	Amount
30400 - ATO Supervisory Levy	DR $259.00
85000 - Income Tax Payable	Dr $8,555.00
48600 - Prior Years Under/Over Provision for Income Tax	Cr $493.00
60400 - Cash at Bank	Cr $8,321.00

Important: Once the payment has been posted to the general ledger (as a Bank Statement transaction type), the levy will appear as a line item in the Transaction List.

When the transaction is clicked on and edited, the levy amount can be found in the Tax Instalment Details panel by selecting the More + to the right of the 85000 amount. 

Details and SMSF Supervisory Levy Payment Table

The Superannuation Legislation Amendment (Reform of Self Managed Superannuation Funds Supervisory Levy Arrangements) Bill 2013 has been introduced in the House of Reps. It amends the Superannuation (Self Managed Superannuation Funds) Supervisory Levy Imposition Act 1991 and the Superannuation (Self Managed Superannuation Funds) Taxation Act 1987 to reform the self-managed superannuation fund (SMSF) supervisory levy arrangements.

The Government has reported that there is currently a shortfall of SMSF levy revenue compared to the costs of regulating the sector. The government will increase the annual SMSF levy from $191 (in 2012-13) to $259 from 2013-14 onwards to ensure full cost recovery. 

The payment of the SMSF levy will be brought forward so it is levied and collected in the same financial year. This is consistent with Australian Prudential Regulation Authority (APRA) regulated funds, which pay the superannuation supervisory levy in the same financial year it is levied. The ATO has stated that the change in the timing of the collection of the SMSF levy will be phased in over the two financial years (2013-14 and 2014-15) to give SMSFs time to adjust. 

BGL have previously received the following confirmation from the ATO:

• The levy is still deductible.
• The deduction applies for the financial year it is paid.

Refer to the Payment Table below for more information on the Supervisory Levy that needs to be paid on lodgement.

The following table shows the amount of supervisory levy that needs to be paid depending on the status of the fund during the financial year.

(Click for larger image)

For information on how expenses should be treated when an SMSF has Exempt Current Pension Income (ECPI), refer to the ATO Website. 

Supervisory Levy and Deductibility

Currently, supervisory levy is always treated as fully deductible in Simple Fund 360.

Note: Where the fund has no assessable income Simple Fund 360 will automatically treat the levy as non-deductible. 

If you wish to treat it as non-deductible, you will need to create an expense account and select Expenses - Management and administration expenses as the tax label and use that account for the supervisory levy.

This will get picked in the SMSF Annual Return under Section C Label J2 (provided the Non-Deductible percentage of General Expenses is 100%) under Members | Fund Pension Policies.

Newly Registered Funds

Simple Fund 360 will automatically adjust the supervisory levy for newly registered funds. For example, if the fund is registered in 2014, there will be an adjustment of $130 so that the amount of levy payable is $518.

How does Simple Fund 360 know to adjust a newly registered fund? 

If the fund formation date (date formed) in Fund Details is in the current year, Simple Fund 360 will make the adjustment. 

The date formed in the example above is 01/08/2013. The current year is the 2014 financial year; Simple Fund 360 will make the adjustment of $130 for the levy.