Section C - deductions
Item 11 Label K - exempt current pension income (ECPI)
We've seen many reporting issues and common mistakes for ECPI. To help you, we offer detailed information in Self-managed super funds and tax exemptions on pension assets.
ECPI must be reported in section C item 11 label K.
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For further information on ECPI, see the following:
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No deductions against exempt income
Many SMSFs are claiming deductions for approved auditor fees, supervisory levy, management and administration expenses relating to ECPI.
If all the income derived by an SMSF is claimed as ECPI, and there is no other assessable income, these tax-related expenses should not be shown in section C - deductions under label J or label L or any other label. No deductions are allowable against exempt income.
Make sure you read Self-managed super funds and tax exemptions on pension assets.
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Item 11 Label F - death or disability premiums
You need to be aware when claiming under this label only specific deductions for these benefits are allowed. Misreporting may give rise to amendments and subsequently to a tax shortfall being raised.
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Treasury proposed amendments to the tax law to provide transitional relief to complying super funds for the deduction of insurance premiums for disability super benefits (TPD). The transitional arrangements will ensure that the current industry practice for deducting TPD premiums will apply from 1 July 2004 until 30 June 2011.
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Item 11 Label H - approved auditor fee
You need to include the approved auditor fee here, not as part of the management and administration expenses, item 11 label J.
Item 11 Label I - investment expenses and Label J - management and administration expenses
Funds commonly misreport under these two labels. Check if the expenses you want to claim under these two labels are allowed and can be verified.
Funds also need to consider whether the expense is capital or revenue in nature as capital expenses are not deductible. Capital expenses form part of the fund's asset cost base for CGT purposes.
Do not report all eligible expenses in one label. You will need to split them into the correct deduction labels.
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If the fund has both accumulation and pension income, expenses will have to be apportioned between the two.
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Item 11 Label U - forestry managed investment scheme deduction (FMIS)
When reporting a deduction for FMIS, you need to be aware that not all payments to their forest scheme manager are deductible. For example, if the SMSF is a subsequent participant, the amount paid in acquiring the interest in an FMIS is not deductible.
Item 11 Label L - other deductions
Take care when reporting the code that applies to the other deductions.
Sections within Reporting for income tax
Last Modified: Monday, 9 January 2012