2016/2017 EOFY Processing Procedures - Part Pension Part Accumulation Scenario – Simple Fund 360 Knowledge Centre

Overview

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 are part pension and part accumulation.

Note

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.

Scenario

In this example, the fund has two members.

John Jones has both a Pension account and an Accumulation account. John's pension balance is over the $1.6m cap. The excess amount will be commuted to John's existing accumulation account.

Mary Jones has a Pension account and the balance is over the $1.6m cap. The excess amount will be cashed out.

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).

Refer to the ATO Valuation Guidelines.
The Investment Summary Report can be used to check Market Values are up to date. Click Here for details.

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.

The Actuarial Percentage received from the Actuary is 93% which has been entered in the Fund Pension Policies screen for the 2016/17 Financial Year.
Enter CGT Reset Transactions and complete CGT Reset Documentation.

Step 3: Comply with Transfer Balance Cap as at 30 June 2017

Before processing the commutation, Create Entries until 30/06/2017 to reflect updated Market values.

John Jones - Partial Commutation to comply with Transfer Balance Cap

In this scenario, John's pension balance is over the $1.6m cap. The excess will be commuted to John Jones existing accumulation account.

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. In this example, it is going to be for John Jones and his pension account.

In this example, John Jones's current pension account balance is $2,642,450 which is $1,042,450 over the $1.6m cap.

This amount is going to be commuted to his existing accumulation account.

Click Save & Prepare Documents to prepare the commutation documents if required. Otherwise, click Save.

The following message will display.

Select Yes.

Select No to the Is this member going back into pension now? message.

Mary Jones - Processing a cash out to comply with Transfer Balance Cap

In this scenario, Mary's pension balance is over the $1.6m cap. The excess will be cashed out.

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. In this example, it is going to be for Mary Jones and her pension account.

In this example, Mary's pension account balance is $1,926,750 which is $326,750 over the $1.6m cap.

The excess amount will be cashed out.

Click Save.