• #### B Gross tax

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This information may not apply to the current year. Check the content carefully to ensure it is applicable to your circumstances.

End of attention

Show at B the total of amounts T1 plus J.

Use examples 5 and 6 to help you calculate the gross tax amount.

#### Example 5: Income tax calculation: Superannuation fund showing income at R3 No-TFN quoted contributions item 10

Example 5a: Complying superannuation fund

The Natalie Superannuation Fund is a complying fund. However, it has income that must be taxed at more than 15%.

The fund received \$10,000 in assessable contributions (shown at R item 10) all of which are employer contributions. Of that amount, \$8,000 is shown at R1 item 10 for members who quoted their TFN, but \$2,000 is shown at R3 item 10 for members who have not quoted their TFN and who opened their account either:

• on or after 1 July 2007
• before 1 July 2007 but the assessable contributions made for the member in the year exceeded \$1,000.

The fund has also incurred \$1,000 in administration expenses (Q item 11). The superannuation fund's taxable income is \$9,000.

For the purposes of calculating the amount to be shown at J Tax on no-TFN quoted contributions, T1 Tax on taxable income and B Gross tax, work out the amount of tax as follows:

 Amount Rate Tax No-TFN quoted contributions(amount from R3 item 10, tax amount shown at J item 12) \$2,000 31.5% \$630 Assessable contributions(from R item 10) \$10,000 Total assessable income(from V item 10) \$10,000 less Deductions Administration expenses(from Q item 11) \$1,000 Taxable income(from A item 12, tax amount shown at T1 item 12) \$9,000 15% \$1,350 Gross tax(shown at B item 12) \$1,980#

# The amount of gross tax (shown at B item 12) is the sum of the no-TFN quoted contributions tax (shown at item 12) and the tax (shown at T1 item 12) worked out on the taxable income shown at A item 12.

See Appendix 3 for more information on the applicable tax rates.

Example 5b: Non-complying superannuation fund

Most of the income of non-complying funds is taxed at 45%, but a tax rate of 46.5% applies to no-TFN quoted contributions.

If the Natalie Superannuation Fund was a non-complying fund, you would calculate J Tax on no-TFN quoted contributions,T1 Tax on taxable income, and B Gross tax as follows:

 Amount Rate Tax No-TFN quoted contributions(amount from R3 item 10, tax amount shown at J item 12) \$2,000 1.5% \$30 Assessable income Assessable contributions(from t R item 10) \$10,000 Total assessable income(from V item 10) \$10,000 less Deductions Administration expenses(from Q item 11) \$1,000 Taxable income(from A item 12, tax amount shown at T1 item 12) \$9,000 45% \$4,050 Gross tax(shown at B item 12) \$4,080#

# The amount of gross tax (shown at B item 12) is the sum of the no-TFN quoted contributions tax (shown at J item 12) and the tax (shown at T1 item 12) worked out on the taxable income shown at A item 12.

See Appendix 3 for more information on the applicable tax rates.

Example 5c: Nil taxable income or loss

The Natalie Superannuation Fund is a complying fund. However, it has income which must be taxed at more than 15%.

The fund received \$2,000 in assessable contributions, all of which are employer contributions for members who have not quoted their TFN and whose account was opened either:

• on or after 1 July 2007
• before 1 July 2007 but the assessable contributions made for the member in the year exceeded \$1,000.

Show the \$2,000 at R3 item 10 and also at R item 10.

The fund has also incurred \$3,000 in administration expenses (shown at Q item 11). The fund's taxable income is \$1,000 loss.

 Amount Rate Tax No-TFN quoted contributions(amount from R3 item 10, tax amount shown at J item 12) \$2,000 31.5% \$630 Assessable income Assessable contributions(from R item 10) \$2,000 Total assessable income(from V item 10) \$2,000 less Deductions Administration expenses(from Q item 11) \$3,000 Taxable income or loss(from A item 12, tax amount shown at T1 item 12) 0 [\$1,000 (L)] 15% \$0 Gross tax(shown at B item 12) \$630

The gross tax of \$630 (plus any other amounts payable) is payable even though the fund made a loss for the income year.

See Appendix 3 for more information on the applicable tax rates.

#### Example 6: Superannuation fund showing income at U Net non-arm's length income item 10

Example 6a: Complying superannuation fund

The Elizabeth Superannuation Fund is a complying fund. However, it has income that must be taxed at more than 15%.

The fund received \$10,000 of assessable contributions (shown at R item 10), and \$4,000 of private company dividends. All private company dividends are generally treated as non-arm's length income unless that income is consistent with an arm's length dealing. See U Net non-arm's length income for a definition of 'arm's length dealing'. Of the \$4,000 private company dividends, \$2,000 is treated as non-arm's length income. The net non-arm's length income is taxed at 45%.

Non-arm's length income expenses are \$100. These expenses can be deducted only from the non-arm's length income. All non-arm's length income is shown on the tax return as a net amount of income. Accordingly an amount of \$1,900 is shown at U item 10.

The amount of taxable income remaining after taking into account the non-arm's length income is referred to as the low tax component.

The fund has also incurred \$2,500 in administration expenses (shown at Q item 11) that are not considered to be attributable to the earning of the non-arm's length income.

The superannuation fund's taxable income is \$11,400 (shown at A item 11).

 Amount Rate Tax Assessable income Assessable contributions(from R item 10)plus \$10,000 Net private company dividends (arm's length dealing)(from J item 10)plus \$2,000 Net private company dividends (non-arm's length dealing)(from U item 10) \$1,900 Total assessable income(from V item 10)less \$13,900 Deductions Administration expenses(from Q item 11) \$2,500 Taxable income (from A item 12) \$11,400 Components of taxable income Non-arm's length component \$1,900 45% \$855 Low tax component (that is other taxable income) \$9,500 15% \$1,425 Tax on taxable income (shown at T1 item 12) \$2,280

The amount of \$2,280 is shown at T1 item 12 and also at Gross Tax B as in this example there are no No-TFN quoted contributions.

Example 6b: Non-complying superannuation fund

The income of non-complying superannuation funds is taxed at the rate of 45% (except for a tax rate of 46.5% which applies to no-TFN quoted contributions).

If the Elizabeth Superannuation Fund was a non-complying fund, all of its income would be taxed at the same rate because it does not have no-TFN quoted contributions. You would calculate its gross tax as follows:

 Amount Rate Tax Assessable income Assessable contributions(from R item 10)plus \$10,000 Net private company dividends (including those treated as non-arm's length income)(from J and U item 10) \$3,900 Total assessable income(from V item 10)less \$13,900 Deductions Administration expenses(from Q item 11) \$2,500 Taxable income(from A item 12) \$11,400 45% \$5,130 Tax on taxable income (shown at T1 item 12) \$5,130