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How to calculate an interim period balance

If you are performing some form of release of monies from the fund when it is not the end of the financial year, then you will need to create an Interim Period.

Examples of a release of funds include:

  • Conversion to a pension account
  • Rollover out of the fund
  • Payments to the ATO for Excess Contributions Tax, Division 293 Tax and Refund of co-contributions
  • Contribution splitting

Note: DO NOT PROCEED if you have NOT recorded all transactions in the fund up to the end date of the interim period.

To convert an account from a date other than 1 July, proceed with all the steps below to create an Interim Period and generate an Interim Account Balance.

The date of the Interim Account Balance (referred to as ‘the Interim Date’) should be one day prior to the date on which the new account is to commence.

For example, if the member has requested the new account to operate from 1 December 2020, the Internet Account Balance should be calculated as at 30 November 2020.

The process to verify the Interim Account Balance is similar to the process for closing a financial year. Trustees of Self-Managed Superannuation Funds may need professional assistance to complete this process.

Regardless of the method used, it may not be possible to guarantee absolute accuracy in the calculation of an Interim Member Balance when conversion is performed mid-year. For example, Trust Tax Distribution data may not be available, as statements are generally sent after the end of the financial year. Some asset valuations may only be available at selected end of period dates and may not be exact for the Interim Date selected.

Firstly, you should select the Periods tab and then select Interim Period.

You will then see the Interim Periods screen. Select Add New Interim Period.

You will then see the Interim Entries Settings screen. You will see a list of Interim Periods if there were any.

The interim period will generally start from 1 July of the year concerned, unless there has been a previous Interim Period created. If there was a previous Interim Period created, then the start date would be the date after the previous Interim Period finished.

The “To” date will be the either the day of the payment or the immediate previous day. If you do not input this date in correctly, then it may cause issues when you try and make the release payment.

Enter the period dates and then select Next – Market Revaluation.

You will now see the Interim Market Revaluation screen. This screen will also show the date for the revaluation which you entered as the “To” date.

For assets listed on the ASX where you have the asset ID, Mclowd will automatically include the ASX market price. For any other assets, you will need to confirm the most recent market price and enter it against that asset. You may need to go to websites for some investments to confirm the most recent market value.

Once you are satisfied with the valuation, select SAVE REVALUATION. You will be asked to confirm the interim revaluation. Select OK, then select NEXT – CALCULATE INCOME TAX.

You will then see an Interim Taxable Income screen, which will incorporate a number of sections. You will need to complete all these sections. Make sure you select SAVE before moving to the next section. The following will provide a brief description for each part of Interim Taxable Income.

INTERIM TRUST DISTRIBUTIONS

As you are performing an Interim Tax calculation, you are unlikely to have accurate taxable trust distribution figures. You could either perform an estimate based on a prior year or leave it blank (assume all income received is taxable).

Select SAVE and then select NEXT – INTERIM CAPITAL GAINS.

INTERIM CAPITAL GAINS

Any capital gains from asset sales will be displayed here. It is unlikely that there would be capital gains from trust distributions shown here.

Select SAVE and then select NEXT – SECTION B: INTERIM INCOME.

SECTION B: INTERIM INCOME

Any gross income will be shown on this page. You should select the right down arrow at Y: Exempt current pension income and select one of the four alternatives.

Select SAVE INCOME and then select NEXT – SECTION C: INTERIM DEDUCTIONS.

If there is an error when selecting SAVE INCOME, then fix the errors and save again.

SECTION C: INTERIM DEDUCTIONS

Any deductions will be shown on this page. If there are any NON-DEDUCTIBLE EXPENSES, then you should enter them in the right-hand column. Unless there is a member in pension phase, you can select SAVE DEDUCTIONS and then select NEXT – SECTION D: INTERIM INCOME TAX.

SECTION D: INTERIM INCOME TAX

The interim income tax will be calculated on this page. This will take account of known income, deductions, and income tax offsets.

Select SAVE INCOME TAX. You will be asked to confirm the Income Tax Journal entry. Select OK then select NEXT – SECTION E: INTERIM LOSSES.

SECTION E: INTERIM LOSSES

Any income losses and capital losses will be displayed here.

Select SAVE INTERIM LOSSES and then select NEXT – DISTRIBUTE INTERIM P&L.

INTERIM NET PROFIT AND LOSS ALLOCATION TO MEMBER ACCOUNTS

On this screen, you will see the Member Weighted Average figures.

Select ALLOCATE INTERIM P&L. You will be asked to confirm the allocation of the Net P&L. Select OK and then select NEXT – ALLOCATE INTERIM CONTRIBUTIONS TAX.

ALLOCATE INTERIM CONTRIBUTIONS TAX

On this screen, you will see the allocation of tax related to contributions and certain deductions.

Select ALLOCATE CONTRIBUTIONS TAX. You will be asked to confirm the allocation of the Interim Contributions tax. Select OK and then select NEXT – ALLOCATE INTERIM INCOME TAX.

ALLOCATE INTERIM INCOME TAX

On this screen, you will see the Allocation of Interim Income Tax.

Select ALLOCATE INTERIM INCOME TAX. You will be asked to confirm the allocation of the Interim Income tax. Select OK and then select NEXT – ALLOCATE ALL OTHER TRANSACTIONS.

ALLOCATE ALL OTHER INTERIM TRANSACTIONS

You will be asked to process all other allocations to the individual member accounts like contributions, pensions, life insurance premiums, etc.

Select PROCESS ALL OTHER ALLOCATIONS. You will be asked to confirm the allocation. Select OK and then select NEXT – POST ENTRIES.

POST INTERIM ENTRIES TO GENERAL LEDGER

Select the right down arrow and select Yes and then select PROCESS. You will be asked to confirm the general ledger rollover. Select OK.

Now you have finalised the Interim Period and can now proceed to complete any transfers out, like rollover out, payment of excess contributions tax, etc.