Section B - income
Item 10 Label Z - capital gains tax (CGT) event relating to forestry managed investment scheme
In returns for previous years, SMSFs were not required to report CGT events specifically relating to their interest in forestry managed investment schemes.
However, if an SMSF has such a CGT event, label Z must now be completed in the SMSF annual return. A CGT schedule must also be completed, regardless of the amount involved.
SMSFs are misreporting their assets in the annual return where the fund did not dispose of an asset. Take into account the CGT consequences of certain transactions. Take care when categorising assets and calculating capital gain or loss, as errors may create a need to adjust an SMSF's annual return, which then may give rise to tax shortfalls.
Item 10 Label A - net capital gain
When you calculate an SMSF's net capital gain, make sure you use the correct calculation method. There are three methods for calculating a capital gain.
Item 10 Label C - gross interest
In this label report the SMSF's interest income amount only and not a loss amount. You cannot include:
- foreign income
- non-share dividends received from holding a non-share equity interest
- trust distributions.
These items should be reported at item 10 label D and D1, item 10 label J, K and L, and item 10 label M respectively.
Item 10 Label F - transfer from foreign funds
If you have transfers from foreign funds that are assessable, you need to report them here. Show the number of transfers in the number box.
Item 10 Label M - gross trust distributions
We have found that many SMSFs are using the incorrect trust code when reporting the type of trust from which they receive a distribution.
The code best describing the type of trust paying the amount of income shown here can be found in table 3, page 15 of the instructions.
If the income is from more than one trust, the code must represent the trust paying the greatest amount of income to the fund.
If the type of trust making the distribution is unknown, contact the trustee before you submit the return.
Item 10 Label R - assessable contributions
Pay attention to what contributions should and should not be included at this label. If you get it wrong, it will affect your calculations.
Item 10 Label S - other income
You need to select from one of six codes to disclose the type of 'other' income.
Item 10 Label T - assessable income due to changed tax status of fund
You must complete this label if the SMSF has been made non-complying. To do this you need to obtain the market value of the SMSF's assets and the amount of crystallised undeducted contributions post June 1983. You must also complete this label if the fund changed from a foreign super fund to an Australian super fund during the year.
Item 10 Label U - net non arms-length income
Non-arm's length income must be reported at this label. The amount reported at this label is a sum of:
- net non-arm's length private company dividends (U1)
- net non-arm's length trust distributions (U2)
- net other non-arm's length income (U3).
Only deductions relating to the non-arm's length component of income can reduce the SMSF's non-arm's length income. Do not include other deductions at this label.
If the final amount is a loss, quarantine the loss for further deduction against future non-arm's length income. Do not show a loss at label U.
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For more information, refer to Self-managed superannuation fund annual return instructions (NAT 71606).
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If you receive any franking credit amounts (attached to dividend payments) report them in section D item 12 label F4 'credit: refundable franking credits'. You should also include any franking credits amounts as assessable income in section B item 10 label I, L, M and/or E.
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Sections within Reporting for income tax
Last Modified: Monday, 9 January 2012