(The following are further explained in the Guide to Member Tax Calculation)
How would this affect my client?
If the annual tax liability of a member is less than the tax payments made during the year, we credit a refund to the member's Cash Account, otherwise their account is debited with a tax charge.
Which clients are included?
Clients affected are those who held active accounts during the period 1 July 2019 to 30 June 2020, and kept their accounts open until 25 February 2021.
What if my client's account is closed?
Members who leave the Fund prior to the year's annual processing date will not receive the benefit of any franking credits, foreign income tax offsets or any revenue/capital losses that have accrued. These tax benefits will be allocated on a proportional basis across all active accumulation accounts as at the processing date.
For further information, please refer to the Annual taxation adjustments section of the relevant Product Disclosure Statement.
What if my client has switched between super and pension accounts during the financial year, or since 1 July?
If your client has switched between super and pension accounts during or since the 2019/20 financial year, the tax calculation will be completed on both of these accounts, with the transactions being processed to the open account.
What if my client has transitioned their super or pension accounts since 1 July?
If your client transitioned from PortfolioOne to Grow Wrap in December 2020, the tax calculation will still be completed on their accounts as they’re in the same super fund. The transactions have been processed as usual to their open account.
Why would my client be debited a tax charge?
Clients may be debited tax charges if they disposed of assets and realised capital gains as a result during the financial year.
What do my clients see?
Your clients will see different adjustments on their Cash Transactions Report depending on the type of account they hold.
For superannuation clients:
- Superannuation tax calculation adjustment (credit or debit) - the total net tax position
- Distributed tax benefit adjustment - the forfeited tax benefits from closed member accounts.
For pension clients:
- Distributed tax benefit adjustment - the franking credits applicable to the account.
For clients who have switched between super and pension:
- Distributed tax benefit adjustment (credit or debit) - the total net tax position in the closed super account
- Distributed tax benefit adjustment - the franking credits applicable to the open pension account.