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  • K and L Transfers from reserves

    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 2016–17 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 291-25.01 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 2016–17 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 then do not include at K the contributions received by the SMSF in 2016–17 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 2016–17 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: 19 Feb 2018QC 51269