'Difficult' new ECPI calculations prompt update from Class
As part of its latest software release, Class has introduced some key updates for meeting the new ATO guidelines around claiming ECPI for the 2017/18 income year onwards.
Class said the new ATO guidelines bring significant changes to the current industry practice of how ECPI is calculated across a financial year.
“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 per cent pension phase, and the unsegregated method (for any periods where it is in a mix of both pension and accumulation phase),” Class explained.
“The ECPI percentage must only be applied to income and expenses falling within the unsegregated periods.”
The previous approach, Class explained, was to apply either the segregated or unsegregated method across an entire year.
“The new guidelines mean that trustees now have additional record keeping requirements, and potentially need to keep track of several accounting periods in a year to claim ECPI correctly,” the software provider explained.
“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 chief executive Kevin Bungard said it is critical that administrators and the trustees of funds with pensions understand the new rules and apply the ECPI percentage correctly.
“It is hard to see how funds being administered manually will meet the new requirements, especially on top of all the other super reform obligations,” said Mr Bungard.
“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.”
Miranda Brownlee is the deputy editor of SMSF Adviser, which is the leading source of news, strategy and educational content for professionals working in the SMSF sector.
Since joining the team in 2014, Miranda has been responsible for breaking some of the biggest superannuation stories in Australia, and has reported extensively on technical strategy and legislative updates. Miranda has also directed SMSF Adviser's print publication for several years.
Miranda also has broad business and financial services reporting experience, having written for titles including Investor Daily, ifa and Accountants Daily.