Show at B the amount of tax payable before the allowance of any rebates, tax offsets and credits.
The compliance status of the fund affects the tax rates that apply. If the fund is a regulated superannuation fund, ADF or PST and you have not received a Notice of non-compliance from APRA, then the fund is a complying fund and the standard tax rate is 15%. If the fund is a non-complying fund the standard tax rate is 45%.
However, different tax rates apply to the following types of income and you must ensure that you apply the correct rate of tax amounts shown at:
- R3 No-TFN quoted contributions item 10
- U Net non-arm's length income item 10
- T Assessable income due to changed tax status of fund item 10.
See Appendix 3 for more information on the applicable tax rate.
The examples below should help you to determine the gross tax calculation. There are special provisions for no-TFN quoted contributions. See R Assessable contributions in these instructions for examples.
If you show no income at R3, U and T item 10, then the amount you show at B is the amount at A multiplied by the applicable tax rate. Otherwise use examples 5 and 6 to help you calculate the gross tax amount.
Example 5: Income tax calculation: Superannuation fund showing income at R3 No-TFN quoted contributions item 10
Example 5a: Complying superannuation fund
The Natalie Superannuation Fund is a complying fund. However, it has income that must be taxed at more than 15%.
The fund received $10,000 in assessable contributions (shown at R item 10), all of which are employer contributions. Of that amount, $8,000 is shown at R1 item 10 for members who quoted their TFN, but $2,000 is shown at R3 item 10 for members who have not quoted their TFN and whose account was opened either:
- on or after 1 July 2007, or
- prior to 1 July 2007 but the assessable contributions made for the member in the year exceeded $1,000.
The fund has also incurred $1,000 in administration expenses (J item 11). The superannuation fund's taxable income is $9,000.
For the purposes of calculating the amount to be shown at J No-TFN quoted contributions tax and B Gross tax, work out the amount of tax as follows:
|
Amount |
Rate |
Tax |
|
No-TFN quoted contributions |
$2,000 |
31.5% |
$630 |
|
Assessable contributions |
$10,000 |
|||
Total assessable income |
$10,000 |
|||
less |
||||
Deductions |
||||
Administration expenses |
$1,000 |
|||
Taxable income |
$9,000 |
15% |
$1,350 |
|
Gross tax |
$1,980# |
# The amount of gross tax is the sum of the no-TFN quoted contributions tax shown at J item 12 and the tax worked out on the taxable income shown at A item 12.
See Appendix 3 for more information on the applicable tax rates.
Example 5b: Non-complying superannuation fund
Most of the income of non-complying funds is taxed at 45%, but a tax rate of 46.5% applies to no-TFN quoted contributions.
If the Natalie Superannuation Fund was a non-complying fund, you would calculate its gross tax as follows:
Amount |
Rate |
Tax |
||
No-TFN quoted contributions |
$2,000 |
1.5% |
$30 |
|
Assessable income |
||||
Assessable contributions |
$10,000 |
|||
Total assessable income |
$10,000 |
|||
less |
||||
Deductions |
||||
Administration expenses |
$1,000 |
|||
Taxable income |
$9,000 |
45% |
$4,050 |
|
Gross tax |
$4,080# |
# The amount of gross tax is the sum of the no-TFN quoted contributions tax shown at J item 12 and the tax worked out on the taxable income shown at A item 12.
See appendix 3 for more information on the applicable tax rates.
Example 5c: Nil taxable income or loss
The Natalie Superannuation Fund is a complying fund. However, it has income which must be taxed at more than 15%.
The fund received $2,000 in assessable contributions, all of which are employer contributions for members who have not quoted their TFN and whose account was opened either:
- on or after 1 July 2007, or
- before 1 July 2007 but the assessable contributions made for the member in the year exceeded $1000.
Show the $2,000 at R3 item 10 and also at R item 10.
The fund has also incurred $3,000 in administration expenses (shown at J item 11). The fund's taxable income is $1,000 loss.
Amount |
Rate |
Tax |
||
No-TFN quoted contributions |
$2,000 |
31.5% |
$630 |
|
Assessable income |
||||
Assessable contributions |
$2,000 |
|||
Total assessable income |
$2,000 |
|||
less |
||||
Deductions |
||||
Administration expenses |
$3,000 |
|||
Taxable income or loss |
$1,000 (L) |
15% |
$0 |
|
Gross tax |
$630 |
The gross tax of $630 (plus any other amounts payable) is payable even though the fund made a loss for the income year.
See appendix 3 for more information on the applicable tax rates.
Example 6: Superannuation fund showing income at U Net non-arm's length income item 10
Example 6a: Complying superannuation fund
The Elizabeth Superannuation Fund is a complying fund. However, it has income that must be taxed at more than 15%.
The fund received $10,000 of assessable contributions (shown at R item 10), and $4,000 of private company dividends. All private company dividends are generally treated as non-arm's length income unless that income is consistent with an arm's length dealing. See U Net non-arm's length income for a definition of 'arm's length dealing'. Of the $4,000 private company dividends, $2,000 is treated as non-arm's length income. The net non-arm's length income is taxed at 45%.
Non-arm's length income expenses are $100. These expenses can be deducted only from the non-arm's length income. All non-arm's length income is shown on the tax return as a net amount of income.
The amount of taxable income remaining after taking into account the non-arm's length income is referred to as the low tax component.
The fund has also incurred $2,500 in administration expenses (shown at J item 11) that are not considered to be attributable to the earning of the non-arm's length income.
The superannuation fund's taxable income is $11,400.
Amount |
Rate |
Tax |
|||
Assessable income |
|||||
Assessable contributions |
$10,000 |
||||
Net private company dividends (arm's length dealing) |
$2,000 |
||||
Net private company dividends (non-arm's length dealing) |
$1,900 |
||||
Total assessable income |
$13,900 |
||||
Deductions |
|||||
Administration expenses |
$2,500 |
||||
Taxable income |
$11,400 |
||||
Components of taxable income |
|||||
Non-arm's length component |
$1,900 |
45% |
$855 |
||
Low tax component (that is other taxable income) |
$9,500 |
15% |
$1,425 |
||
Gross tax |
$2,280 |
||||
Example 6b: Non-complying superannuation fund
The income of non-complying superannuation funds is taxed at the rate of 45% (except for a tax rate of 46.5% which applies to no-TFN quoted contributions).
If the Elizabeth Superannuation Fund was a non-complying fund, all of its income would be taxed at the same rate because it does not have no-TFN quoted contributions. You would calculate its gross tax as follows:
Amount |
Rate |
Tax |
|||
Assessable income |
|||||
Assessable contributions |
$10,000 |
||||
Net private company dividends (including those treated as non-arm's length income) |
$3,900 |
||||
Total assessable income |
$13,900 |
||||
Deductions |
|||||
Administration expenses |
$2,500 |
||||
Taxable income |
$11,400 |
45% |
$5,130 |
||
Gross tax |
$5,130 |
||||