Issue

The Investment has taken up CGT Relief in the 2016-17 financial year and notional deferred gains is showing on the Unrealised Capital Gain report, but it is not included in the Deferred Tax Reconciliation Report. 

Cause

Class doesn't fully support for tax effect accounting on the notional deferred gain when the fund has taken up CGT relief using the proportionate method. By applying the proportionate method for CGT relief and deferring the notional gains, the fund will have a future tax liability and Class should create a provision for deferred tax for the amount of notional deferred gain if the fund tracks tax effect accounting. Please note that the Deferred Tax Assets calculation will be correct if the fund is in an overall loss position after applying carried forward capital loss. 

We have an open development ticket to update the deferred tax provision algorithm to support deferred gain but not yet been scheduled and therefore we don't have a time frame for this enhancement at this stage.

Resolution

Manually take up the additional Deferred Tax Liabilities (DTL) to reflect via the 'Post Fund Income Tax Expense' screen within the 30 June period update. 

Refer to our User Guide, View and Amend Income Tax Expenses for detailed steps.

The DTL can be calculated as 15% * Total Deferred Notional Gains and the amount will not be further reduced by the pension exemption factor.