Background
From 1 July 2016, if you invest in a qualifying early stage innovation company (ESIC), you may be eligible for tax incentives. The tax incentives for early stage investors (sometimes referred to as 'angel investors') are contained in Division 360 of the Income Tax Assessment Act 1997.
This article explains how to process this in Class.
Resolution
Class does not automatically process this offset so you will need to follow this manual work around to edit Provision for Income Tax and add the offset manually into the Annual Return.
Step 1: Edit the Provision for Income Tax for accounting purpose
Navigate to Fund Level > Periodic Processing > Period Updates
- Select the relevant Financial Year
- Click on View/Rollback
- From the pop-up screen, click on Post Fund Income Tax Expense
- Enter the Provision for Income Tax to account for the tax offset.
| Provision for income tax | Example | NRAS | Amount after adjustment |
| Positive (Credit Balance) | 10,000 | 500 | 9,500 |
| Negative (Debit Balance) | (10,000) | 500 | (10,500) |
Step 2: Manually adjust the SMSF Annual Return to include the new credits
Navigate to Fund Level > Periodic Processing > Browse Tax Lodgments
- Click on the relevant tax year
- From the return screen, click on the Annual Return link
- Go to Section D: Income tax calculation statement > please select label D1 for Early stage venture capital limited partnership (ESVCLP) tax offset, or select label D2 for Early stage investor (ESI) tax offset > and then enter the amount.