• L Other deductions

    Show at L the total amount of all other deductions that do not fall into any of the other categories shown in section C Deductions.

    Deductions that are specifically allowable for superannuation activities include amounts in the following 9 categories.

    Exclusion of personal contributions

    A complying superannuation fund (including a successor fund) can deduct an amount for personal contributions of a member to the extent the personal contributions have been included in the fund’s assessable income in an earlier year and the member has reduced the amount the member deducted by a notice (the variation notice) under section 290-180 of the ITAA 1997 if:

    • that variation notice was received by the fund after it had lodged its income tax return for the income year that included the contribution as assessable income, and
    • the fund has not exercised its option (under subsection 295-195(3) or 295-197(4) of the ITAA 1997) to amend the return for the income year that included the contribution as assessable income.

    If the notice is received after the fund has lodged its tax return for the income year in which the contributions were made, the fund may choose to amend the assessment of the earlier income year in which the contribution was made to exclude the amount from its assessable income. This choice may be made if it would result in a reduction in the fund’s tax liability for the earlier income year that is greater than the reduction that would occur in the fund’s tax liability for the current year (subsections 295-195(2) and (3) and 295-490(1) of the ITAA 1997).

    A successor fund is also entitled to a deduction to the extent the contributor’s personal contributions have been reduced by a notice given to the successor fund under section 290-180 of the ITAA 1997 and the original fund has included the contribution amount in its assessable income (subsections 295-197(3) and (4) and 295-490(1) of the ITAA 1997).

    TOFA

    If the TOFA rules apply to calculate an assessable gain or deductible loss on the fund’s financial arrangements include at L any deductible losses relating to the financial arrangements.

    TOFA amounts that have been included elsewhere should not be included here. For example, amounts that have already been included at:

    • Section C: Deductions – A Interest expenses within Australia
    • Section C: Deductions – B Interest expenses overseas
    • Section C: Deductions – R Foreign exchange losses
    • Section B: Income – D Net foreign income

    If what you show at L or elsewhere in Section C: Deductions includes an amount brought to account under the TOFA rules, also complete item 16 Taxation of financial arrangements (TOFA).

    For more information, see the Guide to the taxation of financial arrangements (TOFA) rules.

    Contribution that is a fringe benefit

    A superannuation entity can claim a deduction for an amount included in its assessable income as an assessable contribution that is a fringe benefit because it will be taxed as a fringe benefit in the hands of the contributor. The amount can be deducted in the income year in which the contribution is included in assessable income.

    A contribution made for an employee to a complying superannuation fund is not a fringe benefit.

    Return of contributions by non-complying funds

    A superannuation fund that has been non-complying since 1 July 1988, or since it was established if this is later, can deduct an amount which it pays to an entity (the receiving entity), so far as the amount reasonably represents the direct or indirect return of (a) a contribution for which the receiving entity or another entity has deducted or can deduct an amount, or (b) earnings on such a contribution, and the receiving entity includes the amount in its assessable income under section 290-100 of the ITAA 1997. The amount can be deducted by the superannuation fund in the income year in which it is included in the receiving entity's assessable income.

    Deductible balancing adjustment amounts

    If the fund ceases to hold or to use a depreciating asset, it will need to calculate a balancing adjustment amount to include in its assessable income or to claim as a deduction.

    For more information, see the Guide to depreciating assets 2016.

    Environmental protection activities (EPA) expenditure

    A deduction is allowed (under section 40-755 of the ITAA 1997) for certain capital expenditure incurred for the sole or dominant purpose of:

    • preventing, fighting or remedying pollution of the environment resulting from an earning activity, or the site of an earning activity, or
    • treating, cleaning up, removing or storing waste resulting from an earning activity, or the site of an earning activity.

    Expenditure that forms part of the cost of a depreciating asset is not deductible as expenditure on EPA if a deduction is available for the decline in value of the asset.

    For more information, see the Guide to depreciating assets 2016.

    Deduction relating to listed investment company (LIC) capital gain amount

    A LIC can pay a dividend to a superannuation entity that includes a LIC capital gain amount which is shown in the LIC’s dividend statement.

    The complying superannuation entity can claim a deduction of 33 1/3 % of that LIC capital gain amount.

    An Australian resident non-complying superannuation fund that is a trust can claim a deduction of one-half of that LIC capital gain amount.

    Deduction relating to foreign non-assessable non-exempt income

    Certain expenses relating to foreign non-assessable non-exempt income are allowable deductions against the fund’s assessable income if the expenses incurred are a cost in relation to certain debt interests (see section 25-90 of the ITAA 1997, or subsection 230-15(3) of the ITAA 1997 for a debt interest that is a financial arrangement covered by the TOFA rules). For superannuation funds, the relevant non-assessable, non-exempt income is foreign source income that is covered by section 23AI or 23AK of the ITAA 1936.

    These deductions should not be applied against D1 Gross foreign income at item 10 for the purpose of calculating D Net foreign income or a foreign loss.

    Superannuation (Financial Assistance Funding) Levy Act 1993

    Levies imposed by regulations under section 6 of the Superannuation (Financial Assistance Funding) Levy Act 1993 can be deducted by regulated superannuation funds and ADFs in the year in which the levy is incurred.

    Print in the Code box the code from table 5 that best describes the largest amount included at L Other deductions.

    You cannot claim a deduction against the assessable income of the fund for superannuation benefits paid.

    There is no provision for funds to transfer or pass on deductions to other entities (for example, life insurance companies or PSTs).

    Table 5: Other deduction codes

    Code

    Other deductions in respect of:

    C

    Exclusion of personal contributions

    T

    Deductible TOFA losses

    B

    Contribution that is a fringe benefit

    R

    Return of contributions by non-complying funds

    A

    Deductible balancing adjustment amounts

    E

    Environmental protection activities (EPA) expenditure

    I

    Deduction relating to LIC capital gain amount

    N

    Deduction relating to foreign non-assessable non-exempt income

    S

    Superannuation (Financial Assistance Funding) Levy Act 1993

    O

    Other deductions not listed above

    M Tax losses deducted

    Show at M the tax losses (from an earlier income year) that the fund is claiming. The fund can claim tax losses only to the extent that its total assessable income exceeds total deductions (other than tax losses).

    The fund’s tax losses brought forward must first be deducted from the amount of the fund’s net exempt income (section 36-15 of the ITAA 1997). The fund’s net exempt income for an Australian resident is the fund’s gross exempt income less the expenses (other than capital expenses) incurred in deriving that income and any taxes payable outside Australia on that exempt income. Example 4c shows the effect of exempt current pension income on tax losses.

    Tax losses are not the same as ‘capital losses’ which may result from a capital gains tax event. Do not show net capital losses at M. See V Net capital losses carried forward to later income years at item 13.

    The trust loss legislation in Schedule 2F to the ITAA 1936 affects the deductibility of prior year losses by all trusts that are not excepted trusts (as defined in section 272-100 of Schedule 2F to the ITAA 1936), such as non-complying superannuation funds.

    The fund may need to complete and attach a Losses schedule 2016 to its tax return; see Schedules and the Losses schedule instructions 2016.

    Last modified: 15 Jul 2016QC 48112