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  • E1, E2, E3 and E Refundable tax offsets questions

    Attention

    Warning:

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

    End of attention

    If the SMSF is entitled to any refundable tax offsets, the offsets reduce any remaining tax at T2 Subtotal. If the amount of refundable tax offsets exceeds the remaining tax at T2, show the excess at I Tax offset refunds. If the amount of refundable tax offsets is less than the remaining tax at T2 the shortfall becomes the tax payable amount at T5.

    E1 Complying fund’s franking credits tax offset

    See Entitlement to a franking credits tax offset for details on entitlement to a franking credits tax offset.

    Is the SMSF entitled to a complying fund's franking credits tax offset?

    No

    Leave E1 blank. Go to E2.

    Yes

    Read on.

    Write the franking credits tax offsets at E1.

    You must also include the franking credits as income at the appropriate question in Section B.

    Include at E1 Australian franking credits that are attached to:

    • dividends and non-share dividends including where they are exempt current pension income
    • a New Zealand franking company's          
      • franked non-share dividends and
      • assessable franked dividends.
       

    Do not include:

    • franking credits if the SMSF is non-complying (include these at C2 rebates and tax offsets)
    • credits that you included at C1 Foreign income tax offset
    • franking credits attributable to a dividend that is excluded from assessable income because family trust distribution tax has been paid
    • New Zealand imputation credits (an Australian resident cannot claim New Zealand imputation credits).

    Legislation

    Section 67 and Division 207 of the Income Tax Assessment Act 1997External Link

    E2 No-TFN tax offset

    An SMSF is entitled to a no-TFN tax offset in 2015–16 if:

    • it was required to pay extra tax on no-TFN-quoted contributions in any of the previous three income years, and
    • the no-TFN-quoted contributions were for a member who gave their TFN to the SMSF for the first time in 2015–16.

    Is the SMSF entitled to a no-TFN tax offset?

    No

    Leave E2 blank. Go to E3.

    Yes

    Read on.

    Write the no-TFN tax offset at E2.

    The amount of no-TFN tax offset that the SMSF can claim is the total of the additional no-TFN-quoted contributions tax (see J Tax on no-TFN-quoted contributions) that the SMSF was required to pay:

    • in any of the three previous income years
    • for members who gave their TFN to the SMSF for the first time in 2015–16.

    Because SMSF members are either trustees of the SMSF, or directors of a corporate trustee, it is very rare for an SMSF to pay no-TFN-quoted contributions tax, and therefore very rare for SMSFs to be entitled to a no-TFN tax offset. Penalties may apply if you claim a no-TFN tax offset that the SMSF is not entitled to.

    Legislation

    Section 67-23 and Subdivision 295-J of the Income Tax Assessment Act 1997External Link

    Example: Entitlement to a no-TFN tax offset

    SMSF E2 received $10,000 assessable contributions for Julie, a member, during 2014–15. Julie had not provided the SMSF with her TFN by 30 June 2015. In the SMSF 2014–15 annual return the SMSF reported Julie's $10,000 contribution as a no-TFN-quoted contribution. It paid additional tax of $3,150 on the no-TFN-quoted contributions.

    Julie provided her TFN to SMSF E2 on 30 September 2015.

    SMSF E2 is entitled to claim a no-TFN tax offset for the additional no-TFN-quoted contributions tax of $3,150 paid for 2014–15.

    SMSF E2 writes $3,150 at E2 No-TFN tax offset in its 2015–16 annual return.

    End of example

    E3 National rental affordability scheme tax offset

    Is the SMSF entitled to a national rental affordability scheme (NRAS) tax offset?

    No

    Leave E3 blank. Go to E4.

    Yes

    Read on.

    Write the NRAS tax offset at E3.

    The refundable tax offset is only available when the Secretary of the Department of Social Services has issued a certificate under the NRAS. In order to claim the tax offset in the 2015–16 SMSF annual return, the NRAS certificate must relate to the NRAS year 1 May 2015 to 30 April 2016.

    For more information, see:

    E4 Exploration credit tax offset

    Is the SMSF entitled to an exploration credit tax offset?

    No

    Leave E4 blank. Go to E.

    Yes

    Read on.

    Write the exploration credit tax offset at E4.

    A SMSF may be entitled to a tax offset for exploration credits received during the income year if it was an Australian resident for the whole of the income year.

    The amount of the tax offset is the total value of exploration credits the SMSF received in the income year. However, special rules may apply where the SMSF has received exploration credits from a partnership or a trust.

    For more information, see:

    E Refundable tax offsets

    Write at E the total of:

    • E1 Complying fund's franking credits tax offset
    • E2 No-TFN tax offset
    • E3 National rental affordability scheme tax offset, and
    • E4 Exploration credit tax offset.

    The tax offsets reduce the tax that remains at T2 Subtotal. If the amount of refundable tax offsets at E:

    • is less than the tax at T2, the shortfall becomes the SMSF's tax payable amount at T5 Tax payable
    • is greater than the tax at T2, show the excess at I Tax offset refunds.
    Last modified: 20 Apr 2017QC 48236