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  • Completing labels in the SMSF annual return

    The following scenarios are provided to assist you to complete the relevant labels in the SMSF annual return.

    The examples below are based on the following background information:

    • the SMSF has a range of investments, mainly Australian shares and managed funds
      • the portfolio is regularly revised to ensure the fund isn't overweight in any particular share or fund, due to uneven price movement on the ASX – this results in some capital gains and capital losses, and there are capital gain distributions from the managed funds themselves.
    • the SMSF has two members and, as at the start of the financial year, ownership of the assets was 50:50
    • the SMSF received $35,000 in dividends, with franking credits of $15,000, from each of the four companies invested in, for a total of $200,000
    • the SMSF also earned interest of $200; ordinary trust income of $20,000, with imputation credits of $2,000 from their managed funds; foreign income of $10,000, with a foreign tax credit of $500; and capital gains, all discount, of $4,000
    • the total income of the fund was thus $234,200
    • the expenses are negligible and can be ignored
    • the tax payable, prima facie, is $35,130.

    The following additional assumptions are made in relation to these examples:

    • the fund has all necessary actuarial certificates where required; for example, where the proportionate method is used
      • these certificates show a 50% split of income (if the percentage shown on the certificate was different, the calculations in the examples would need to be adjusted to reflect the percentage shown on the certificate)
    • there was no non-arm's length income
    • there were no contributions
    • the pensions met all the requirements under the Superannuation Industry (Supervision) Act 1993.

    Examples 1 to 4 below demonstrate the calculation of taxable income or loss and the amount due or refundable where only some of the assets of an SMSF are held to support retiremen- phase income streams.

    Example 1 (assumes the assets aren't segregated)

    The fund has two members; both have met their preservation age but are not yet 60. One draws a pension of $36,000 from 1 July; the other is still in accumulation phase within the fund. The assets are not segregated.

    This would be shown on the SMSF annual return as follows:

    Section B, Item 11 Income – assumes the assets are not segregated

    Field

    Value

    Net capital gain (label A)

    $4,000

    Gross interest (label C)

    $200

    Net foreign income (label D)

    $10,000

    Franked dividend amount (label K)

    $140,000

    Dividend franking credit (label L)

    $60,000

    Gross trust distributions (label M)

    $20,000

    Assessable contributions (label R)

    $0

    Gross income (label W)

    $234,200

    Exempt current pension income (label Y)

    $117,100

    Total assessable income (label V)

    $117,100

     

    Section D, Item 13 Income tax calculation statement – assumes the assets are not segregated

    Field

    Value

    Taxable income (label A)

    $117,100

    Tax on Taxable income (label T1)

    $17,565

    Tax on no-TFN-quoted contributions (label J)

    $0

    Gross tax (label B)

    $17,565

    Subtotal 1 (label T2)

    $17,565

    Subtotal 2 (label T3)

    $17,565

    Complying fund's franking credits tax offset (label E1)

    $62,000

    Refundable tax offsets(label E)

    $62,000

    Tax payable (label T5)

    $0

    Tax offset refunds (label I)

    $44,435

    Supervisory levy (label L)

    $259

    Amount due or refundable (label S)

    $44,176
    (refund)

    Note that you should also include ECPI in Section A label 10 A of the SMSF annual return.

    End of example


    Example 2 (assumes the assets are segregated)

    The fund has two members which have met their preservation age but are not yet 60. One draws a pension of $36,000 from 1 July, and the other is still in accumulation phase within the fund.

    The assets are segregated. The pensioner is assigned all the shares, and the non-pensioner has all the other assets (as the pension member has all share assets segregated to provide for their benefit, it's assumed the value of the remaining assets is equal to this amount).

    This would be shown on the SMSF annual return as follows:

    Section B, Item 11 Income – assumes the assets are segregated

    Field

    Value

    Net capital gain (label A)

    $4,000

    Gross interest (label C)

    $200

    Net foreign income (label D)

    $10,000

    Franked dividend amount (label K)

    $140,000

    Dividend franking credit (label L)

    $60,000

    Gross trust distributions (label M)

    $20,000

    Assessable contributions (label R)

    $0

    Gross income (label W)

    $234,200

    Exempt current pension income (label Y)

    $200,000

    Total assessable income (label V)

    $34,200

    Section D, Item 13 Income tax calculation statement - assumes the assets are segregated

    Field

    Value

    Taxable income (label A)

    $34,200

    Tax on Taxable income (label T1)

    $5,130

    Tax on no-TFN-quoted contributions (label J)

    $0

    Gross tax (label B)

    $5,130

    Subtotal 1 (label T2)

    $5,130

    Subtotal 2 (label T3)

    $5,130

    Complying fund's franking credits tax offset (label E1)

    $62,000

    Refundable tax offsets (label E)

    $62,000

    Tax payable (label T5)

    $0

    Tax offset refunds (label I)

    $56,870

    Supervisory levy (label L)

    $259

    Amount due or refundable (label S)

    $56,611
    (refund)

    Note that you should also include ECPI in Section A label 10 A of the SMSF annual return.

    End of example


    Example 3 (assumes the assets aren't segregated and the fund paid a pension for part of the year)

    This example uses the same two members as examples 1 and 2. However, in this case the pension started on 1 October. We assume the two dividend payments are for equal amounts ($100,000 before 30 September and $100,000 after this date).

    The assets aren't segregated. Some shares were sold in November to provide cash for the pension, and a capital gain of $10,000, discountable, was made. The managed fund conceded that its capital gains were all made in the last month of the reporting period – that is, June.

    The income for this example will be different to that in examples 1 and 2, due to the additional $10,000 capital gain realised.

    The SMSF will show the following amounts at the specified labels on the SMSF annual return 2017.

    This would be shown on the SMSF annual return as follows:

    Section B, Item 11 Income (assumes the assets are not segregated and the fund paid a pension for part of the year)

    Field

    Value

    Net capital gain (label A)

    $14,000

    Gross interest (label C)

    $200

    Net foreign income (label D)

    $10,000

    Franked dividend amount (label K)

    $140,000

    Dividend franking credit (label L)

    $60,000

    Gross trust distributions (label M)

    $20,000

    Assessable Contributions (label R)

    $0

    Gross income (label W)

    $244,200

    Exempt current pension income (label Y) (see note 1)

    $91,575

    Total assessable income (label V)

    $152,625

    Section D, Item 13 Income tax calculation statement (assumes the assets aren't segregated and the fund paid a pension for part of the year)

    Field

    Values

    Taxable income (label A)

    $152,625

    Tax on taxable income (label T1)

    $22,894

    Tax on no-TFN-quoted contributions (label J)

    $0

    Gross tax (label B)

    $22,894

    Subtotal 1(label T2)

    $22,894

    Subtotal 2 (label T3)

    $22,894

    Complying fund's franking credits tax offset (label E1)

    $62,000

    Refundable tax offsets (label E)

    $62,000

    Tax payable (label T5)

    $0

    Tax offsets refunds (label I)

    $39,106

    Supervisory levy (label L)

    $259

    Total amount due or refundable (label S)

    $38,847
    (refund)

    Note that you should also include ECPI in Section A label 10 A of the SMSF annual return.

    Note 1: As the assets are not segregated, the amount shown here is 75% of the ECPI that would be calculated for the pensioner if the pension had been payable for the full year.

    If assets in a fund aren't segregated and a member starts an income stream, the ECPI deduction for that year is the amount of income attributable to the pensioner apportioned from the start date of the pension – that is, if the pension started on 1 March, the ECPI deduction would be 25% of the income attributed to the member (assuming no contributions or special income was received).

    End of example


    Example 4 (assumes the assets are segregated and the fund paid a pension for part of the year)

    This example is the same as example 3, except that the assets are segregated.

    This would be shown on the SMSF annual return as follows:

    Section B, Item 11 Income (assumes the assets are segregated and the fund paid a pension for part of the year)

    Field

    Value

    Net capital gain (label A) (see note 2)

    $4,000

    Gross interest (label C)

    $200

    Net foreign income (label D)

    $10,000

    Franked dividend amount (label K)

    $140,000

    Dividend franking credit (label L)

    $60,000

    Gross trust distributions (label M)

    $20,000

    Assessable contributions (label R)

    $0

    Gross income (label W)

    $234,200

    Exempt current pension income (label Y) (see note 3)

    $100,000

    Total assessable income (label V)

    $134,200

    Section D, Item 13 Income tax calculation statement (assumes the assets are segregated and the fund paid a pension for part of the year)

    Field

    Value

    Taxable income (label A)

    $134,200

    Tax on taxable income (label T1)

    $20,130

    Tax on no-TFN-quoted contributions (label J)

    $0

    Gross tax (label B)

    $20,130

    Subtotal 1 (label T2)

    $20,130

    Subtotal 2 (label T3)

    $20,130

    Complying fund's franking credits tax offset (label E1)

    $62,000

    Refundable tax offsets (label E)

    $62,000

    Supervisory levy (label L)

    $259

    Total amount due or refundable (label S)

    $41,611
    (refund)

    Note that you should also include ECPI in Section A label 10A of the SMSF annual return.

    Note 2: Where a pension is started with segregated assets, the ECPI deduction is equal to all income attributed to the assets funding the pension.

    Note 3: Where the above pension is started part-way through a year, no apportioning of income occurs if the assets are segregated and the income is all received after the start date.

    Where income is received before the start of the pension the income received doesn't form part of the ECPI deduction.

    End of example
      Last modified: 04 Oct 2019QC 21546