In this edition, we want to draw your attention to an SMSF related due date: the ATO due date for the lodgment of annual returns for newly registered SMSFs, which falls on 28th February 2024. We aim to address commonly asked questions on key topics related to completion of year end processing. This includes insights into fund policy setup for ECPI calculation, an overview of exception reports, and guidance on preparing for annual return lodgment.
Class Help Centre Navigation
To ensure you have access to the information you need, our comprehensive support services and resources are available through multiple channels, including phone, live chat, email, webform, webinars, e-learning and Class Help Centre.
We invite you to explore our Class Help Centre, which serves as a self-service information center. This resource offers guide on essential topics such as getting started with Class, fund transitions, user guides, and knowledge-based articles covering various subjects.
Simply type in the key word such as "ECPI" in the search box, and the relevant articles will come up in a list of articles containing the key word. If you are not able to find useful articles for a specific key word, please feel welcome to email email@example.com and we will try to improve the content and searchability of Help Centre with your assistance. Many thanks in advance.
Fund Policies and ECPI Calculations
As you finalise your fund year-end processing, it is best practice to review your fund policy set up in the financial year you are processing.
Navigate to fund level> Settings> Fund Defaults
It is strongly recommended that only ONE new fund policy is setup for each financial year. This ensures that the settings align with the latest financial year processing, encompassing correct setups for GST settings, defer tax accounting policy, defer contribution tax policy, segregation of asset pension strategy, readiness to override new actuarial percentages, and the election of the ECPI calculation method. It is unnecessary to create two fund policies for changes in segregation periods within the same financial year. Once your fund policies are correctly configured, kindly re-process the period update, (only reprocess the last period update if multiple updates have been performed)
When your fund has different segregation period, the ECPI calculation is based on election of ECPI calculation method. Please read this article for more information and guidance.
To verify whether Class accurately calculates the ECPI on various segregation periods, we recommend running the Statement of Taxable Income report.
Navigate to fund level> Reports> Run Reports> Statement of Taxable Income
Once you've completed processing your year-end funds, Class provides an Exceptions Report to assist in reviewing the fund.
Navigate to fund level > Reports > Exceptions report.
This report offers validation checks across multiple areas that warrant a thorough review to ensure the accuracy of your processing. It's important to note that while not all warning messages demand immediate fixing, they do necessitate review when necessary. For more information on the different validation error checks within the Exceptions Report, please consult our article.
Here are some of the common errors and resolution to fix this errors.
- One or more holdings in this fund have balance reconciliation errors
- The total of interim Distributions for XXXXX does not equal the total of Final Distribution for XXXX: Financial Year. The interim Distributions exceed the Final Distribution by XXXX
- ECPI Calculation Method Changing
It's important to note that while reviewing the validations, not all warning messages require immediate action. Here are a few examples:
- Investment - Warning In FY2023, Fixed Asset XXXX (Code 1) Property XXX has a decline in value of $0. This warning prompts a review of the Investments > Depreciation worksheet to ensure the correct input of the depreciation value for the year. If the Asset has been fully depreciated, and no further depreciation value required, you can safely ignore the warning message.
Reconciliation - Warning One or more holdings in this fund have balance reconciliation errors. In this scenario, a review of Investments > Browse Holding account is recommended. Check for any red balance holdings as of 30/6/XX. If discrepancies exist, verify the accuracy of ledger data or feeds data. If the feeds balance is incorrect, you may choose to contact support team to clear the incorrect data holding balance or you may opt to ignore this warning message based on your assessment.
Annual Return Lodgment
Class enables the seamless lodgment of annual return directly to the ATO, offering significant time savings, centralised lodgment capabilities across your entire business, and a reduction in processing errors.
Explore some of the useful articles include:
- Lodgments – Learn about key reason a lodged tax return may not be showing on the ATO Portal; how to resolve issues with multiple tax return submissions; missing member information in Section F; how to process Return Not Necessary (RNN)for newly established SMSF. etc.
- Generating Tax Return in fund level and Lodging the Tax Return in business level from Class
- Access guidance on troubleshooting various validation errors that may arise during the lodgment process.
- Running a report to show funds with lodgment date.