The fund received insurance payouts for property damaged by a natural disaster, how do I process it in Class?
To process this in Class:
Step 1: Take up the Insurance premium
Take up the Insurance premium
Create a new income type with proper Tax Return Classification
Refer to our User Guide, Set up a new income type, for detailed steps
The ATO website provides information regarding the tax treatment of damaged property due to disaster of Insurance payouts from a disaster.
Clear the damaged asset from book cost
Scenario 1: No Depreciation Worksheet setup
- To reduce the cost base for the damaged part of the property, you can process a "Capital Return" event.
Navigate to Fund Level > Transactions > Investments - Corporate Action > Capital return
- For the repaired part of the property which increases property cost base, process a "Property Capital Improvement" event.
Navigate to Fund Level > Transactions > Investment - Buy > Property Capital Improvement
- Match off these two business events
Scenario 2: Depreciation Worksheet has been setup
- To dispose of the fixed asset
Navigate to Fund Level > Transactions > Investment - Sell > Fixed Asset Disposal
- Update this damaged asset value to nil in Depreciation Worksheet, you can
Navigate to Fund Level > Investments > Depreciation Worksheet > click on the tab of the required property
- Click on "Edit" for the damaged asset
- From the pop-up screen, click on the drop down list to Disposal
- Enter $0 into the Termination Value field
- Click on Save
Take up the new asset for this property
- Process a Business event of "Property Capital Improvements" via Investments > Property Capital Improvement
- Match this Business event against the cash received transaction
- Navigate to the Depreciation Worksheet and add it as a New Fixed Asset via Investments > Depreciation Worksheet > click on the tab of the required property > "New Fixed Asset".
Refer to our User Guide for more details on Property Capital Improvement - Capitalising & Depreciating New Assets.
- If you consider a CGT event is triggered, you can refer to our User Guide on Fixed Asset Disposal.
- Resolutions could also be different based on different scenarios. We strongly recommend you contact Class Support if the circumstances differ from the above example.