Income tax assessments
How you record your income tax assessment (payment or refund) will depend on the makeup of the tax assessment and whether it is your first full year using Mclowd.
You should also review the Statement of Financial Position for the previous financial year, so you can determine the relevant account to which the transaction should be allocated.
1-1090 Tax Refund Due (created on migration)
2-1100 Income Tax Payable
2-1300 Imputation Tax Credit
2-2100 Sundry Creditor (SMSF supervisory fee claimed as a sundry creditor)
5-1000 ATO Supervisory levy – only claimed as expense when paid for
Your situation should be covered by the following examples presented below.
Simple tax payable transaction
Funds-only income were assessable contributions. There were no franking credits. The tax payable as at 30 June 2019 was $6,500.
On 1 March 2020, the super fund lodged the SMSF Annual Return and paid the tax payable amount. You can deal with the income tax payment in one of the following three ways:
Bank feed data (including allocation from suspense)
If you have imported the bank data, you can allocate the relevant transaction to “Income Tax Payment” via the Suspense allocation process.
From the Suspense Allocation process, select Edit against the ATO payment transaction.
On Edit Record:
- Select Fund Against Member Account.
- Select 2-1100 Income Tax Payable and choose Update.
Add Expenses process
Choose Expense from the Menu, then choose Add Expense.
On the Add Expense screen:
- Choose your bank account
- Enter the date of the transaction
- Enter a description, like ‘Income Tax Payment’
- Select 2-1100 Income Tax Payable from the Allocate To list
- Enter the amount paid
- Select Add Expense
The final option is to create a journal entry. The journal entry would be as follows:
|DR 2-1190 Income Tax Payable||$6,500.00|
Tax refund with imputation credits
Mclowd does not allow split transactions for income tax refunds or payments. Therefore, in such instances, you will need to create a journal entry.
If at the end of 2020, you had (for example) the following:
|Sundry Creditor (ATO Supervisory levy)||$259|
Then you would have the following journal entry once the tax refund was paid into the bank account:
|1-1000 SMSF Bank||DR $2,933.05|
|2-2100 Sundry Creditor (SMSF levy)||DR $259.00|
|2-1100 Income Tax Payable||DR $6,988.95|
|2-1300 Imputation Credits||CR $10,181.00|
Income tax refund – First year of recording transactions
If you entered a tax refund when you migrated to Mclowd, then as long as you have not recorded the ATO Supervisory levy as a Sundry Creditor on migration, you can either allocate the tax refund via allocating the Bank Feed data or use a journal entry. The two options are detailed below.
Bank feed data (including suspense allocation legacy)
If you have imported bank data, you can allocate the relevant transaction to Income Tax Refund via Manual Data Import Allocation or Suspense Allocation Legacy.
The other option is to create a journal entry. The journal entry would be as follows:
|DR 1-1000 Bank||$6,500.00|
|CR 1-1090 Income Tax Refund||$6,500.00|
However, if you also recorded the ATO Supervisory levy as a creditor in your migration year, then the journal entry would be:
|1-1000 SMSF Bank||DR $6,241.00|
|2-2100 Sundry Creditor||DR $2,59.00|
|1-1090 Income Tax Refund||CR $6,500.00|