Welcome to the October edition of FAQs.
Starting 1 July 2023, a quarterly reporting requirement will be instituted for all SMSFs. Under this new directive, SMSFs are obligated to report their Transfer Balance Account Report (TBAR) events within 28 days of the respective quarter's conclusion. The Australian Taxation Office (ATO) has strongly recommended that SMSFs initiate the quarterly reporting process in advance of this effective date.
Here are some Help Articles that can assist you with the TBAR reporting process in Class.
- TBAR FAQ: A collections of frequently asked question about TBAR to address common inquiries and provide guidance for your reference..
- TBAR Amendment: Guidance on the processing for amending previously lodged TBAR events that is generated in Class.
- TBAR Lodgment Console: Generate TBAR files for reportable events and download the csv file to lodge through Tax Agent Portal.
- Manual TBAR Event: This tool allow you to record TBAR events that were lodged or created outside of Class or make adjustments to a member’s Transfer Balance account to align with ATO TBAR records.
- TBAR Console: At the fund level, the TBAR console provide monitoring and tracking of Transfer Balance Account of each members. If you are seeking the insight int the TBAR Cap Indexation effective 1 July 2023- Please refer to the article here
- TBAR Declaration: Class provide report of TBAR Declaration with the purpose for trustee to give permission to a registered tax agent to lodge TBAR records on behalf of the fund to the ATO through the tax agent portal electronically.
Property Lifecycles - Purchase to Sale & everything in between
Processing a property purchase through Class is a two step process involving both a deposit and a settlement event. When both of these transactions occur in the same financial year, it is a straightforward process, however there are some considerations to make when this purchase falls across two or more financial years.
Property Purchase within same FY: Processing a Property Purchase
Property Purchase over 2 or more FY's: How to process a property purchase across Financial Years
It is important to follow the Help Guides above specifically when a property deposit and settlement fall in different financial years. Failure to process as above can result in the incorrect calculation of Capital Gains upon sale.
Capital Improvements, Property, Plant & Equipment & Depreciation
When your property contains a number of assets such as Capital Allowance items & Capital Works Deductions we recommend including these as part of the property cost base rather than accounting for these separately.
It allows for easy calculation of Capital Gains upon sale and reduces the number of errors that can occur with tracking PPE separately.
Any new asset purchased for a property (whether CA or CWD) can be processed by using the Property Capital Improvement event. These can then be accounted for using the Depreciation Worksheet.
If you are currently maintaining your assets separately from property, you may consider reprocessing the consolidation of fixed assets to one depreciation worksheet under property by following the steps in How to move depreciable asset to Property (2nd year processing in Class)
In Class, there are two options to maintain and post depreciation of property.
Caution: You can only choose one method of calculating depreciation for each property.
Depreciation Worksheet - (Recommended method)
- Automatically calculated CA and CWD each year once set up
- The Depreciation Worksheet can be easily rolled forward each year
- Fixed assets can be easily added/removed to the worksheet
- Simplifies the property disposal process and potential Capital Gain Tax calculation
- CWD will only be posted on tax returns and not on accounting posting
- You need to ensure there is no residual book cost after updating the worksheet.
- Here is more FAQ on depreciation worksheet processing
- Doesn't require set up, useful if the property will only be held for a very short time period e.g. one year
- You can go to Transactions> Fund Expenses> Depreciation to create the manual depreciation once a year.
- CWD will be posted both in accounting and tax returns
Property Subdivision/Splitting a Property
If your client has purchased a property that has since been subdivided or developed, it can be tricky to know how to process this through Class.
This process involves the sale of the original property and the purchase of the new lots. To ensure this is processed correctly and without incurring CGT, we recommend you follow the steps set out in our How to split a combined property into two property accounts article.
As with the property purchase, the property sale requires two events - the deposit event and the sale event. If these occur in two different financial years, additional steps are required to ensure the Capital Gains Tax is recognised in the correct financial year.
Property Sale within the same FY - Processing a Property Sale
Property Sale over two or more FY's - How do I treat a property disposal across multiple financial years?
There is an additional step required when you have used the Depreciation Schedule in Class and our Depreciation Sale/Disposal article can walk you through these steps.
To view the FAQs newsletters from past months please click here.
If you have any questions regarding the articles above, please feel free to contact Support on 1300 851 057 or log your support ticket via thein-app widget.