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ECPI calculation method

If all accounts in your Fund are in Accumulation mode, Not Applicable will be pre-selected in the ECPI Calculation Method step. Choose SAVE and move on to Allocate.

If some or all Fund income attributes to accounts that were in pension mode for part or all of the year, you will need to calculate ECPI in order to claim tax exemption for part of the Fund income.

Choose the arrow to the right of Please Select… in the ECPI (Exempt Current Pension Income) Calculation Field to choose the desired ECPI calculation method.

Click the underlined message to the right of the field to read the ATO’s explanation of Exempt Current Income and to access links to information about methods of calculating ECPI, Actuarial Certificate Requirements, treatment of expenses when an SMSF has ECPI, how capital gains are treated with an SMSF has ECPI, etc.

Mclowd allows you to choose from:

  • Not applicable

This option will be automatically selected if all Fund members have been in Accumulation Mode or Transition to Retirement Mode for the entire year.

  • Use Segregated Method (off-line)

Select this option if all members of the Fund were in 100% Pension mode for the entire year and no member had a member balance exceeding $1.6 million at the start of the relevant year.

  • Use Unsegregated Proportional Method (off-line)

Use this method if the Fund has at least one member is retirement phase at any time during the year and a fund member has a total member balance of over $1.6 million immediately before the start of the relevant year, and that member is receiving a retirement income stream from any source (including the SMSF or another provider).

Note: The ATO specifies which method must be used in certain circumstances (as per notes above). Trustees may elect which method they prefer if the Fund is paying a retirement phase income stream and the fund was not 100% in retirement phase for the entire year, and the fund does not have disregarded small fund assets.  

Trustees are advised to read the information provided by the ATO carefully to ensure they make the correct selection and calculations.

Note: Pending further software upgrades, ECPI calculations must be performed manually off-line and values must be entered manually. Future software upgrades will further automate ECPI calculations.

When you have selected the preferred method, the SAVE button lights and you can SAVE your selection and move to the next step (ECPI Values).