K and L Transfers from reserves

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
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Leave K and L blank. Do not include a transfer from reserve for the member at O. Go to T.
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Yes
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Read on.
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Write the amount the SMSF transferred in 2020–21 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
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Leave K blank. Go to L.
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Yes
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Read on.
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Write at K the total of the assessable amounts allocated in 2020–21 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 2020–21 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:
No
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Leave L blank. Go to T.
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Yes
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Read on.
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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 2020–21 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: 27 May 2021QC 64911