Understand Expense Based Expenses

You can use expense based expenses to process expenses based on the amount of other expenses. The system can calculate expense based expenses based on all types of expenses, such as fixed and variable expenses, as well as expense reimbursements. You can set up expense based expenses at the total fund level and at the class level. A class level expense based expense can have different expense rates for each class. Expense based expenses can include positive and negative expenses as well as expense reimbursement adjustments in the calculation.

The system derives expense based expenses by applying a fixed rate to the balance of a set of expenses/fees associated with ledger accounts. You can set up an expense based expense rule with criteria that can identify one or more ledger account ranges associated with expenses from the income statement. Expense based expenses do not use tier rules. Because calculations for expense based expenses depend on amounts calculated for other expenses, you process expense based expenses as the last step of global expense processing, after the completion of all other expense and expense reimbursement processing.

As an example, you can use expense based expenses to apply an expense on an expense for funds subject to Harmonized Sales Tax (HST) and Goods and Services Tax (GST) on management fees and various other administration fees.

To use expense based expenses:

Create an expense based expense rule.
The rule can include one or more ledger account ranges for fund activity.
Create an expense based expense that uses the expense based expense rule.
You can create an expense based expense at the TF or class share class level. You define a fixed tax rate for the system to apply to the underlying expense amount.
After processing for other types of expenses and reimbursements is complete, process the expense accruals for the expense based expenses.