New ATO guidelines have “significantly” changed industry practice of how ECPI is calculated, says Class.
Whereas previously the industry approach was to use either the segregated or unsegregated method for a whole financial year, the ATO guidelines require a different approach for the 2017/18 and later years.
Class has released updates to Class Super which it says will streamline compliance with the new rules.
“For the financial year ended on 30 June 2018 onwards, a fund must use both the segregated method (for the period while it is in 100% pension phase), and the unsegregated method (for any periods where it is in a mix of both pension and accumulation phase). The ECPI percentage must only be applied to income and expenses falling within the unsegregated periods i.e. actuarial certificates now only cover the periods where there are unsegregated assets in the fund,” said Class.
Class said these new rules meant that trustees would have to keep additional records, and may need to have several accounting periods in a single year to correctly claim ECPI.
“This new approach needs more data to perform the calculations and is more difficult to apply.”
“The actuaries who perform the ECPI calculations have worked together to define a new data standard. In this latest release, Class Super has updated period update algorithms, ECPI calculations, and now supports the new data standard for integrated actuarial certificate providers.”
Class CEO Kevin Bungard said it was hard to see how SMSFs being prepared manually would be able to meet the new requirements.
“The latest updates to Class Super automate the tracking, calculation and application of ECPI, delivering considerable time savings and allow trustees to remain compliant with the new guidelines,” he said.