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  • K and L Transfers from reserves

    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

    Did the SMSF transfer any amounts to the member's account from the SMSF's reserves?

    No

    Leave K and L blank. Do not include a transfer from reserve for the member at O. Go to T.

    Yes

    Read on.

    Write the amount the SMSF transferred in 2015–16 from a reserve to the member's account at:

    • K Transfer from reserve: assessable amount
    • L Transfers from reserve: non-assessable amount
    • O Allocated earnings or losses.

    Read on for information about how to complete these items.

    Legislation

    Regulations 292-25.01 and 292-90.01 of the Income Tax Assessment Regulations 1997.

    K Transfer from reserve: assessable amount

    Did the SMSF allocate an amount to the member's account where the amount:

    • is an assessable contribution of the SMSF not included at another question
    • was allocated from a reserve and would be assessable income if the amount was made as a contribution or
    • was allocated from a reserve and is not excluded from being a concessional contribution?

    No

    Leave K blank. Go to L.

    Yes

    Read on.

    Write at K the total of the assessable amounts allocated in 2015–16 from the SMSF's reserves to the member's account.

    In some cases, the amount you write at K is greater than the amount actually allocated to the member’s account. Where the amount was allocated to the member’s account from a reserve instead of an employer making a contribution to the SMSF, multiply the amount that was transferred from the reserve by 1.176 to include the 15% tax that the SMSF would have paid if the employer had actually made a contribution to the SMSF for the member. Write at K this grossed-up amount rather than the amount that was transferred from the reserve.

    The amount at K is included in the member's concessional contributions.

    If you have used a contribution reserve strategy for concessional contributions as described in TD 2013/22 do not include at K contributions received by the SMSF in 2015-16 and allocated to the member’s account in the following financial year (instead include those contributions at either A Employer contributions or B Personal contributions).


    Example: Grossing up a transfer from reserve: assessable amount

    An employer has an obligation to make a $1,000 super contribution for the member.

    Instead of the employer making the $1,000 contribution to the SMSF, the SMSF trustee allocates $850 to the member’s account from a reserve. The $850 takes into account that 15% tax is payable on a $1,000 employer contribution to super.

    The trustee writes $999.60 (that is, $850 × 1.176) at K.

    End of example
    L Transfer from reserve: non-assessable amount

    Did the SMSF allocate an amount to the member's account where the amount is:

    • not assessable contributions of the SMSF and not included at another question, and
    • not an amount that should be included at O Allocated earnings or losses (see information at Transfers from reserves that are not included at K or L)?

    No

    Leave L blank. Go to T.

    Yes

    Read on.

    Write at L the non-assessable amount allocated from the SMSF's reserves to the member's account (other than amounts included at O Allocated earnings or losses).

    The amount written at L is included in the member's non-concessional contributions.

    Transfers from reserves that are not included at K or L

    Generally, all allocations from reserves are reported as either assessable or non-assessable amounts, but certain exceptions apply and these amounts are reported at O Allocated earnings or losses. For example, the following allocations from reserves are included at O Allocated earnings or losses:

    • amounts allocated to all members, or to a class of members to which the reserve relates, on a fair and reasonable basis, and the amount allocated for 2015–16 is less than 5% of the value of the members' interest
    • amounts allocated for the sole purpose of discharging super income stream liabilities that are currently payable
    • allocations following the commutation of a pension, where the amount in the reserve is allocated to an individual as a result of the death of the primary beneficiary of the pension, and it is used to support another income stream for that individual.
    Last modified: 14 Feb 2019QC 48236