Show at R6 the amount of income, that is otherwise assessable to the fund for the income year, that the trustee of the complying superannuation fund or a complying approved deposit fund (the ‘transferor’) has agreed to transfer to a life insurance company or PST (the 'transferee') pursuant to an agreement with that transferee entity. The amount of the income transferred is included in the transferee entity’s assessable income instead.
The fund (transferor) must hold sufficient investments in the transferee entity to cover the tax payable by the transferee entity as a result of the transfer.
The total amount transferred by the fund under all such agreements cannot exceed the amount that would otherwise have been included in the fund’s assessable income under Subdivision 295-C of the ITAA 1997.
The agreement to transfer must be in writing, signed by both parties, must be made before the lodgment of the fund’s tax return, and cannot be revoked. The trustee can only make one agreement for an income year with a particular transferee.
R6 is used to determine R Assessable contributions.
Record keeping
Keep all relevant documents as evidence of the transferee’s consent to accept the transfer of assessable contributions and the associated tax liability.
Example 3 assists you in dealing with member contributions where a complying fund has transferred its tax liability to a life insurance company or PST, including where the fund has no-TFN quoted contributions. The 31.5% additional tax for the no-TFN quoted contributions must be paid by the fund; it cannot be transferred to the life insurance company or PST.
Example 3: Superannuation fund transferring its liability
Example 3a: Complying superannuation fund where all members have quoted their TFNs
A complying superannuation fund can transfer its tax liability on assessable contributions to a life insurance company or PST in which it holds investments, provided the requirements of section 295-260 of the ITAA 1997 are satisfied. The effect of the agreement is that the transferee investment vehicle pays the tax on the fund's behalf.
The Natalie Superannuation Fund is a complying fund that is transferring its tax liability to a life insurance company (shown at R6 Transfer of liability to life insurance company or PST). The fund has sufficient investments in the transferee life insurance company to cover the tax payable by the transferee as a result of the transfer (calculated under subsection 295-260(6) of the ITAA 1997). The fund has $10,000 of assessable contributions (shown at R1 Assessable employer contributions).
The taxable income of the fund is calculated as follows:
|
|
Amount |
Rate |
Tax |
|
|---|---|---|---|---|---|
Income |
|
|
|
|
|
|
Employer contributions |
10,000 |
15% |
$1,500 |
|
|
Total |
$10,000 |
|
$1,500 |
|
|
less |
|
|
|
|
Contributions excluded |
|
|
|
|
|
|
Transfer to life insurance company |
10,000 |
15% |
$1,500 |
|
|
Total |
$10,000 |
|
$1,500 |
|
Taxable income and gross tax |
Nil |
|
Nil |
|
|
Example 3b: Complying superannuation fund with no-TFN quoted contributions
Superannuation funds cannot transfer the additional tax liability caused by no-TFN-quoted contributions to a life insurance company or a PST.
The James Superannuation Fund is a complying fund. However, it has income which is taxed at different rates.
The fund has $10,000 of assessable contributions. Of the total employer contributions, $2,000 was for members who had not quoted their TFN (shown at R3 No-TFN quoted contributions) while the remaining $8,000 was for members who quoted their TFNs (shown at R1 Assessable employer contributions).
The fund has transferred all its assessable contributions to a life insurance company (shown at R6 Transfer of liability to life insurance company or PST).
However, it must still pay the additional tax on the no-TFN quoted contributions income as the following table shows. The total rate of tax that applies to the no-TFN quoted contributions income is 46.5% (which is made up of 15% paid by the life insurance company and an additional 31.5% paid by the fund).
Even though the fund has transferred 100% of the contributions received and has a nil taxable income, it is still liable for $630 tax for the no-TFN quoted contributions. The tax amount of $630 is 31.5% of the $2,000 no-TFN quoted contributions and is shown at J Tax on no-TFN quoted contributions and included at B Gross tax item 12.
|
|
Amount |
Rate |
Tax |
|
|---|---|---|---|---|---|
Income |
|
|
|
|
|
|
TFN quoted contributions plus No-TFN quoted contributions |
$8,000 $2,000 |
15% 46.5% |
$1,200 $930 |
|
|
Total |
$10,000 |
|
$2,130 |
|
|
Less |
|
|
|
|
Contributions excluded |
|
|
|
|
|
|
Transfer to life insurance company |
$10,000 |
15% |
$1,500 |
|
|
Total reduction of assessable income |
$10,000 |
|
$1,500 |
|
Taxable income and gross tax |
Nil |
|
$630 |
|
|
The gross tax of $630 remains payable by the fund even though the fund has transferred 100% of the contributions it received and has a nil taxable income.
G Foreign exchange gains
Show at G assessable foreign exchange gains (from both foreign and domestic sources) made by the fund. See Foreign exchange (Forex) gains and losses.
If the TOFA rules apply to the fund, include all assessable foreign exchange gains from financial arrangements subject to the TOFA rules at G.
If what you show at G includes an amount brought to account under the TOFA rules, also complete item 16 Taxation of financial arrangements (TOFA).