Issue
How do I process a transfer of liability to a life insurance company?
Resolution
To resolve this issue:
Step 1: Create a customised fund income
Step 2: Create a business event to increase the member balance
Step 3: Create a business event to take up the insurance
Step 4: Process a negative event
Step 5: Match the business events
Step 6: Adjust the provision for income tax
Step 7: Check the annual return
Create a customised fund income (Transfer of Liability to Life Insurance Company or PST)
Navigate to Business Level > Settings > Fund Income
- From the Classification Type field, select "Fund Income"
- From the Category Type field, select "Fund Income"
- Click Add New Income Expense Type
- Enter an appropriate name, e.g., Transfer of Liability to Life Insurance Company or PST
- Enter a Code e.g., TransferofLiabilitytoLifeInsuranceCompany
- Update GST Category as "Non-Creditable Acquisition"
- Select "Yes" to Tax Assessable
- Select "R6 - Transfer of liability to a life insurance company or PST" for the Tax Return Label
- Click Save
Create a business event to increase the member balance
Navigate to Fund Level > Transactions > Fund Income > Member Contribution
- Process a transaction as Personal Concessional Contribution
Create a business event to take up the insurance
Navigate to Fund Level > Transactions > Fund General Income
- Select the Income Type, which was created in Step 1
- Enter the Income Date
- Enter the Gross Amount
- Click override on the "Allocate To" setting
- Select the specific member
- Click Submit
Process a negative event
Navigate to Fund Level > Transactions > Fund General Income
- Process a negative fund income as below
- Overwrite the allocation to a specific member
- Overwrite the Tax Assessable to "No"
Match business events off
Navigate to Fund Level > Transactions > Match Transactions
- Match the events from Steps 3 & 4
Adjust the Provision for Income Tax
Run a Period Update for the financial year and adjust the Provision for Income Tax [in this example by ($10,000 + $10,000) x 15% = $3,000]
Navigate to Fund Level > Periodic Processing > Period Updates
- Click on the required financial year
- Click New Period
- Ensure the "Period End Date" is set to the end of the financial year
- Click Process
- Click Post Fund Income Tax Expense, Class, will open a new window
- Click Edit, and then update the amount in Provision for Income Tax field
Refer to User Guide for detailed instruction on how to View and Amend Income Tax Expenses.
Check Annual Return
Run Tax Finalisation and check the detail in the Annual Return:
- Click View Tax Return
- Click Annual Return
The information will be reflected at label R6 in Section B:
"Statement of Taxable Income Report" and "Tax Accounting Reconciliation Report" currently will be incorrect.