RE: Members Position Report

MySF2 — Thu, 04 Jun 2009 22:52:01 GMT

Hi Neil,

The calculations and transactions in the year end will be changed to clearly itemise how everything is calculated and where these items are posted. A couple of other users have also asked for this change so that they could more closely follow how and why certain figures are calculated, particularly when it comes to the split of tax liabilities.

Once that update is available we will contact you to ask that you run through these figures again to verify how and why the various amounts are calculated.

Regards,

MySF

Members Position Report

PP Super — Wed, 27 May 2009 18:51:43 GMT

Hi,

I originally mentioned this in a multi-subject post. In hindsight, that was a mistake and it is much clearer to use separate posts for these items.

I originally posted (references to other issues removed):[quote]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.

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.

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![/quote]

and you replied (again references to other issues removed):[quote] 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.[/quote]

You may have misunderstood my point here. I am not talking about the allocation percentages that MySF has calculated - as you say, we have discussed that in the other post. Neither am I talking about the problem I see in how MySF has actually processed the split, which is also covered in my original post here: [url]http://www.mysf.com.au/members/Topic4267-25-1.aspx[/url]. My problem is just with the figures included in the members position report which do not seem to reflect the actual calculations MySF has performed and the actual percentages MySF has calculated. I now notice that the problem can also be seen on the member information report - though only in the tax split, the profit split here (being after tax) is OK.

I will try and clarify my point:

If I look at the P&L it gives the Amount available for distribution as $196,044.90, during the rollover I saw that the member funds subtracted were $288,391.85 leaving a net $-92,346.95 available to be split and allocated. The P&L also shows a provision for income tax of $5717.60.

MySF has calculated the allocations as member 1: 97.781450%; member 2: 2.218550% and if I look at the Member Information report I can see the profit of $-92,346.95 being split as member 1: $-90,298.19; member 2: $-2,048.76 - which is according to the member allocation expenses, so that makes sense.

However, when I look at the $5717.60 provision for income tax it is split as member 1: $1191.85 (31.07%); member 2: $3941.15 (68.93%) - I cannot see how this can possibly be correct.

You say that:[quote]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.[/quote] and [quote]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.[/quote]I accept that you have to account for the member specific contributions tax on taxable contributions, however it is not the reporting of the fall in members equity I have a problem with here (other than the issue covered in the other post) and in our case it is member 1 who has made the sizeable ($100k) taxable contribution while member 2 has made no taxable contributions so, if anything, this would slew the tax percentages higher for member 1 and lower for member 2.

With regard to the member position report, the tax split is shown the same as the member information report. The Provision for profit however is before tax and is equal to the sum of the profit split + the tax split ie $-86,629.35 ($-92,346.95 + $5,717.60) split as member 1: $-88,521.74 (102.18%); member 2: $1892.39 (-2.18%).

You may notice that these percentages (profit, not tax) are different from my original post, which may give some clue as to what is happening - the difference is that when I reversed the rollover, since my original post, I also entered the liability for the $3836 tax installment paid after 30 June. The result was that the total amount to be split and allocated remained unchanged but the provision for tax dropped by $3836 and the provision for profit (before tax) as reported on the member position report increased by $3836. When MySF did the split it used the same 31.07%/68.93% split on the provision for tax - so whilst the provision for profit changes by the same (but opposite) [u]amounts[/u] as a [u]percentage[/u] this changes.

Finally, you say[quote]We will seek additional information on this and post it as it becomes available.[/quote]
That would be good, I would really appreciate you explaining just how MySF arrives at the provision for tax split that it puts into these two member reports - as I say, I cannot see how they can be correct but, if you still believe this to be correct, at least a clear explanation would help me to understand where these figures come from.

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RE: Members Position Report

Members Position Report