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Master Member
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Last year I rolled over the 2006-2007 year using MySF version 4.0. This year I rolled over the 2007-2008 year using version 7.0.1.
I can see there have been several changes to both the rollover procedures and the year end reports. Some of the rollover changes, eg. provision for future CGT on increase in market value, are very welcome and some of the report reformatting makes for clearer reading.
However, the changes also seem to have introduced a number of bugs/problems:
1) Profit distribution
The income and profit of the fund essentially fall into two categories:
Member specific - eg contributions
Fund general - really everything that isn't member specific
When doing the profit allocation, obviously the member specific items are first allocated to the relevant member and then the fund general components split according to the member allocations. With last years (version 4.0) rollover the member specific contributions and contributions tax were correctly applied and the remaining items split according to the member allocations. On the balance sheet, this could be seen in the members equity with the profit split going to account 3300 Share of Profit and the Contributions tax going to account 3620 Members expenses.
After this years (version 7.0.1) rollover however, account 3620 Members expenses still just shows last years contributions tax amount and a calculation check shows that this years contributions tax (which is actually attributable to just one member) has been split according to the member allocations and incorporated into the profit split going to account 3300 Share of Profit. This is obviously incorrect.
2) Tax deferred liability on change in market value of assets
Has been incorrectly calculated - I have already raised this in a recent post: http://www.mysf.com.au/members/Topic4264-24-1.aspx
3) Member allocation calculation
Does not adjust for contributions tax on deductible contributions - again I have detailed this in a reply to another post: http://www.mysf.com.au/members/Topic4263-24-1.aspx
4) Profit and loss report: profit/loss section
Since the actual fund income tax is split between instalments paid and provision for income tax (ie an increase in instalments paid will decrease the provision for tax) the item Less: Tax Instalments Paid should be applied as part of the Equals: Profit After Tax calculation - so that the full fund income tax is deducted from profit - otherwise the instalment payment is incorrectly increasing the profit after tax (by decreasing the Provision for Income Tax).
5) Members Position Report
I was glad to see that the bottom line members positions now matches the balance sheet figures. However there seems to be a problem with the allocation of Provision for tax.
Ignoring for the moment the profit distribution error noted in 1), I can see that the amount at Provision for profit less the amount at Provision for tax is equal to the increase in Share of Profit (from last year) shown on the balance sheet - which all makes sense and balances out.
Ignoring for the moment the problem with the member allocation calculation noted in 3), the calculated percentages for our fund are (rounded) 97.8% to me and 2.2% to my partner. The Deferred tax liability has been correctly split on the Members position report as per these percentages, however the Provision for tax has been split 31.1% to me and 68.9% to my partner - these figures are just nonsense and haven't given a problem with the bottom line - the error seems to be balanced by the Provision for profit (actually a loss this year) which ends up being split 105.5% to me and -5.5% to my partner! (ie the fund makes a loss, my partner gets a profit and I get a bigger loss than the fund- again just nonsense but canceled out by the tax allocation nonsense!
I am still wading through all the various reports, so there may be other issues but at this point it seems to me that:
Items 1) to 3) are actual errors in calculation in the accounts.
Item 4 is a error in the logic of how the profit and loss report calculates the profit after tax rather than any problem in the actual accounts.
Item 5 is an error in how items in the Members position statement are calculated rather than any problem in the actual accounts.
I am desperately trying to finalise the 2007-2008 figures for audit so I would appreciate your feedback on these items as soon as possible.
Regards,
Neil H.
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Master Member
Group: Forum Members
Last Login: 2 days ago @ 9:53:37 PM
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Hi,
Any feedback on this?
Regards
Neil H.
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MySF Administrator
Group: Administrators
Last Login: 4/11/2010 3:24:01 PM
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Hi,
Apologies for the delay in answering your post.
Regarding question 1), the split of profit may be using a different set of accounts to past versions, but the end result, the split of equity is the same and the values are correct.
Questions 2) and 3) have been answered in the linked posts.
Question 4): Tax installments paid is already part of the tax liability calculation so adding it again would cause it to be double counted. You can see how the software caclulates income tax expense by ticking the 'Show detail' and 'Show income tax calculation' options on the Report Tool screen. The full breakdown of the calculation is usually located on the last page of the report, under the heading "Income tax expense calculation"
Question 5): Some of the information in this question has already been answered in other posts linked in your original question. Many of the items listed as errors are not errors and the allocations and profit calculations are correct and the deferred liability calculations are also correct as outlined in other posts. The tax allocation is not nonsense, it is based on the amount of tax payable by the fund and the amount of taxable income to the fund for which each member is responsible. If we took this out then members who make no contributions may be slugged with an extra large tax bill because of another member who makes a sizeable taxable contribution. The allocation of profits is made based on the formula selected or whatever overriden figures are entered at the time of the rollover. The allocation formulas are also discussed in the other post linked from your original. You can of course choose to use a different formula or override the figures manually. I accept that the 105% to -5% allocation does not sound correct at the end of the day, but if you have tax liabilities from your own contributions and the fund is in a loss overall then the fall in your equity after accounting for tax liabilities may be higher than the original loss itself. We will seek additional information on this and post it as it becomes available.
Regards,
MySF
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Master Member
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Last Login: 2 days ago @ 9:53:37 PM
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Hi
If you had read my post more closely, you would realise that some of your answers do not fit with what I am actually seeing in my MySF results:
Regarding question 1), the split of profit may be using a different set of accounts to past versions, but the end result, the split of equity is the same and the values are correct.
I am sorry, but this is just not true for my results. I accept the fact that using a different set of accounts does not necessarily cause the end result to be different and that this may not be the cause here. However, as I said, the calculation IS different this year. The change in reporting layouts made it harder to pick up where the problem arises, but since I recently repeated the rollover (to source the CGT liability error covered in another post) I was able to see the problem during the year end calculations.
As I said:When doing the profit allocation, obviously the member specific items are first allocated to the relevant member and then the fund general components split according to the member allocations. With last years (version 4.0) rollover the member specific contributions and contributions tax were correctly applied and the remaining items split according to the member allocations. On the balance sheet, this could be seen in the members equity with the profit split going to account 3300 Share of Profit and the Contributions tax going to account 3620 Members expenses.
This was easy to see on the profit & loss where you had:
Profit (including members funds) less total members funds = Available for distribution.
A quick check confirms that last year's "total members funds" is all the member specific contributions, less the contributions tax on the taxable contributions. This is all as it should be.
The new profit & loss layout "available for distribution" is the same as last years "Profit (including members funds)" ie before members contributions are deducted. The deduction to arrive at the amount to be split is no longer included in the P&L however the figure was listed during the end of year rollover and I was able to confirm that it was all the member specific contributions but without the contributions tax being deducted.
The end result is that, as I said:this years contributions tax (which is actually attributable to just one member) has been split according to the member allocations and incorporated into the profit split going to account 3300 Share of Profit. This is obviously incorrect.
I have confirmed all this with my spreadsheet - and, whilst I would not expect you to blindly accept that my spreadsheet is correct, the fact is the results it gives for last year agree with the MySF results and reports whereas they do not for this year - on the other hand if I change the spreadsheet to introduce the error I have reported above, the results do agree with the MySF results for this year and, obviously do not agree for last year.
Ignoring for the moment the inconsistencies of using different accounts from year to year, the fact is that the new system has demonstrably resulted in the contributions tax (correctly allocable to one member) being incorrectly split between members during the member allocation process.
I would have thought you would be able to replicate this by inputing a large deductible (taxable) contribution in for one member and checking the allocation after year end rollover.
Regarding questions 2 & 3, I accept that these are not actually calculation errors - rather that I disagree with the methods being used. As you say, they have been addressed in further detail in the related posts - so I'll leave it there.
Regarding questions 4 & 5, in hindsight, it was a mistake to try and cover multiple subjects in one post - it is much clearer to use separate posts for these items, so I have now moved them to separate posts:
Question 4 to: http://www.mysf.com.au/members/Topic4303-25-1.aspx
and Question 5 to http://www.mysf.com.au/members/Topic4304-25-1.aspx
Whilst MySF will allow me to override the tax deferred liability calculation (question 2) and the member allocation percentages (question 3) I cannot see how to address this ongoing problem (question 1).
Due to time constraints, I had to use my spreadsheets to generate this year's reports and accounts to send to the auditor - however, I still hope to use MySF going forward, so I need to resolve this issue.
Hopefully you will be able to check this out and advise before too long.
Regards
Neil H.
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Master Member
Group: Forum Members
Last Login: 2 days ago @ 9:53:37 PM
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Hi,
Any progress on this?
(ie the outstanding problem - originally question 1)
Regards
Neil H.
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MySF Administrator
Group: Administrators
Last Login: 4/11/2010 3:24:01 PM
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Hi Neil,
We will change this section of the year end so that the various amounts are broken out into their components and noted to say exactly what they are. This will mean that the two or more components that are currently summarised and posed to share of profit will be broken into the share of profit and the member's portion of the tax expense. Note that this will not make any difference to the end numbers (equity will not be any different) rather it will make the process easier to follow.
Regards,
MySF
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Master Member
Group: Forum Members
Last Login: 2 days ago @ 9:53:37 PM
Posts: 111,
Visits: 1,917
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Hi,
We will change this section of the year end so that the various amounts are broken out into their components and noted to say exactly what they are. This will mean that the two or more components that are currently summarised and posed to share of profit will be broken into the share of profit and the member's portion of the tax expense.
This sounds more like it is addressing my original question 5 now moved here http://www.mysf.com.au/members/Topic4304-25-1.aspx
Note that this will not make any difference to the end numbers (equity will not be any different) rather it will make the process easier to follow. this is fine for my original question 5 where I didn't have a problem with the bottom line just the tax/profit split.
However, none of this addresses the ongoing problem central to this post - my original question 1. Where you saidRegarding question 1), the split of profit may be using a different set of accounts to past versions, but the end result, the split of equity is the same and the values are correct. and I have repliedI am sorry, but this is just not true for my results. I accept the fact that using a different set of accounts does not necessarily cause the end result to be different and that this may not be the cause here. However, as I said, the calculation IS different this year.
Please re-read my post of 28/05/09, as I saidI have confirmed all this with my spreadsheet - and, whilst I would not expect you to blindly accept that my spreadsheet is correct, the fact is the results it gives for last year agree with the MySF results and reports whereas they do not for this year - on the other hand if I change the spreadsheet to introduce the error I have reported above, the results do agree with the MySF results for this year and, obviously do not agree for last year.
Ignoring for the moment the inconsistencies of using different accounts from year to year, the fact is that the new system has demonstrably resulted in the contributions tax (correctly allocable to one member) being incorrectly split between members during the member allocation process.
I would have thought you would be able to replicate this by inputing a large deductible (taxable) contribution in for one member and checking the allocation after year end rollover.
My whole point is that since my previous rollover for the 2006-2007 year using MySF version 4.0 and the rollover for the 2007-2008 year using version 7.0.1, your method HAS changed and gives different bottom line results - and I have been able to demonstrate/confirm this. So any changes whichwill not make any difference to the end numbers (equity will not be any different) rather it will make the process easier to follow. does not address the problem I am reporting.
Regards
Neil H.
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Master Member
Group: Forum Members
Last Login: 2 days ago @ 9:53:37 PM
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Hi,
Have you been able to look at the outstanding problem here.
Regards
Neil H.
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Master Member
Group: Forum Members
Last Login: 2 days ago @ 9:53:37 PM
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Hi,
Has anybody had a chance to look at this yet.
(ie the outstanding problem - originally question 1 - as last raised in my post above of 05/06/09)
Regards
Neil H.
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MySF Administrator
Group: Administrators
Last Login: 4/11/2010 3:24:01 PM
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Hi Neil,
We are still working on figuring out what needs to be changed for this. We also have a couple of other items that we are working on alongside this change.
We will do our best to make this change in the next update, which should be out within the next 3 weeks.
Regards,
MySF
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