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The ECPI amount

Mclowd requires you to calculate and enter the Exempt Current Pension Income (ECPI) amount for your Fund (if applicable). You may require an Actuarial Certificate to verify the correctness of this amount.

What is ECPI?

Income earned on assets supporting a superannuation income stream (Pension) benefit is referred to as ‘exempt current pension income’, as this income is not taxed.

How is ECPI Calculated?

Refer to the following to determine whether or not your Fund has ECPI and how much.

What was the total amount of Fund income for the year?

  • Start calculations by determining the total income earned from all Fund assets for the financial year. You should be able to locate this figure by referring to the Taxable Income screen, which you can access by moving back to the Tax Profile field and selecting Review and Edit Tax Data, then choosing the EDIT button. When the Capital Gains Screen displays, choose NEXT – SECTION B: INCOME. Scroll down to V: Total Assessable Income.
  • The total assessable income amount shown here will be adjusted, if appropriate, once you enter the ECPI amount.

Did the Fund, at any time during the year, have one or more members with Pension accounts, receiving Pension income?

  • If yes, some or all income may be tax exempt. ECPI value must be calculated by either the segregated or the unsegregated method.
  • If no, and all accounts were in accumulation mode or Transition to Retirement mode for the entire year, ECPI does not apply. Enter $0 for the ECPI value.

Were all Fund accounts pension accounts, paying Pension income and not receiving contributions, for the entire financial year?

  • If yes, the ECPI value is the total amount of income earned.
  • If no, the ECPI value must be calculated by either the segregated or the unsegregated method.

Are some or all Fund assets pooled together, with profits/losses incurred shared according to the percentage entitlements of each member account?

  • If yes, and all assets are segregated and held in individual member accounts, you can use the Segregated method to determine ECPI.
  • If no, you must use the Unsegregated method to determine ECPI.

Segregated method

Calculate the total amount of income earned from assets held in accounts that were in pension mode for the entire year. This amount is tax free and should be counted in your ECPI value. Did any member have more than $1.6 million in an account at the start of the financial year?

  • If yes, the amount over $1.6 million should have been held in an accumulation account. Any income earned on assets exceeding $1.6 million, owned by an individual member, is taxable and should not be counted in the ECPI amount. Deduct any income earned from these assets from the ECPI value calculated above.

Did the Fund receive contributions from or on behalf of a member?

  • If yes, generally, contributions are not tax free. Verify the tax rules applicable to contributions before including them in the ECPI value.

Did any member move from Accumulation Mode or Transition to Retirement mode to Pension Mode or from Pension Mode to Accumulation Mode or Transition to Retirement mode during the year?

  • If yes, calculate the number of days the member account was in pension mode during the year. Calculate the total income earned on the total assets that were transferred. Divide that total by 365 (or 366 if a leap year) and multiply by the number of days the account was in pension mode. The result can be included in your total ECPI value.

Unsegregated method

If the fund held segregated assets as well as unsegregated, calculate the total amount of income earned from all segregated assets held in accounts that were in 100% pension mode for the entire year, this amount will be included in your ECPI value. If the fund held segregated assets as well as unsegregated, calculate the total amount of income earned from all segregated assets held in accounts that were in 100% pension mode for only part of the year:

  • Calculate the number of days the account was in Pension mode.
  • Calculate the total income earned from segregated assets owned exclusively in an account that was in pension mode for only part of the year.
  • Divide this total by 365 (or 366 for a leap year) and multiply by the number of days the account was in pension mode. Include this amount in your ECPI value.

If the Fund held unsegregated assets, calculate the total amount of income earned from all assets held by accounts in the Fund that were entitled to a share of this income.

  • Use the Member Weighted Averages to determine what portion of income attributes to accounts that were in 100% pension mode for the entire year. This amount will be included in your ECPI value.
  • Use the Member Weighted Averages to determine what portion of income attributes to accounts that were in pension mode for only part of the year.
  • For accounts that transferred to or from pension mode during the year, calculate the number of days the account was not in pension mode.
  • Divide the income attributable to each such account by 365 (or 366 if a leap year) and multiple by the number of days the account was in pension mode.
  • Include that amount in the ECPI value.

If the Fund, at any time during the year, had a mixture of pension and accumulation or transition to retirement accounts, an Actuarial Certificate may be required to verify the ECPI value. Obtain a certificate before entering the ECPI amount.