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, or
• 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 deductible 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:

# 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.

Example 5b: Non-complying superannuation fund

If the Natalie Superannuation Fund is a non-complying fund, most of its income is taxed at the rate of 45%, but a tax rate of 46.5% applies to any no-TFN quoted contributions.

You would calculate J Tax on no-TFN quoted contributions,T1 Tax on taxable income, and B Gross tax as follows:

# 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.

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, or
• 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 deductible administration expenses (shown at Q item 11). The fund's taxable income is $1,000 loss.

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

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 deductible 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 12).

Example 6b: Non-complying superannuation fund

If the Elizabeth Superannuation Fund is a non-complying fund, most its income is taxed at the rate of 45%, but a tax rate of 46.5% applies to any no-TFN quoted contributions).

All of the Elizabeth Superannuation Fund’s income is taxed at the same rate as it does not have any no-TFN quoted contributions. You calculate its gross tax as follows: