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# Section D: Income tax calculation statement

Last updated 26 May 2021

This statement works out the tax liability where there is taxable income.

We use the information which you provide in this section to calculate the Commissioner’s instalment rate under the PAYG instalments system. You must complete all applicable items as accurately as possible to ensure that the rate calculated results in a reliable estimate of tax payable for 2020–21.

To work through the Calculation statement on the tax return, begin with the right-hand column. Four of the labels in the right-hand column (C Non-refundable non-carry forward tax offsets, D Non-refundable carry forward tax offsets, E Refundable tax offsets and H Eligible credits) require certain labels in the left-hand column to be completed so that the total can be inserted at the appropriate label.

The following are mandatory: A, T1, J, T5 and I.

## Calculating your T5 Tax payable and S Amount due or refundable

The steps below are provided to give a basic overview of how the calculation statement is intended to work. Refer to each specific item for a detailed explanation of its application within the calculation statement.

Step 1 Write the following amounts.

• If the amount at O Taxable income or loss item 11 is positive, write the amount at A Taxable income; write 0 (zero) at A if O is a loss.
• T1 Tax on taxable income (dependent on the compliance status of the fund, see the section below for a detailed explanation of T1) is calculated as follows:
• 15% of A if the fund is a regulated superannuation fund and you have not received a notice of non-compliance from APRA
• 45% of A if the fund is a non-complying fund.
• Different tax rates apply to some types of income; you must include at T1 the tax calculated at the correct rate for amounts shown at:
• U Net non-arm's-length income item 10
• T Assessable income due to changed tax status of fund item 10.

• J Tax on no-TFN-quoted contributions (additional tax on these contributions) is calculated on the amount shown at R3 No-TFN-quoted contributions item 10 as follows:
• 32% for a complying fund
• 2% for a non-complying fund.

• Write the amounts from your records for:
• C1 Foreign income tax offset
• D1 Early stage venture capital limited partnership tax offset
• D2 Early stage venture capital limited partnership tax offset carried forward from previous year
• D3 Early stage investor tax offset
• D4 Early stage investor tax offset carried forward from previous year
• E1 Complying fund’s franking credits tax offset
• E2 No-TFN tax offset
• E3 National rental affordability scheme tax offset
• E4 Exploration credit tax offset
• G Section 102AAM interest charge
• H1 Credit for interest on early payments – amount of interest
• H2 Credit for tax withheld – foreign resident withholding (excluding capital gains)
• H3 Credit for tax withheld – where ABN or TFN not quoted (non-individual)
• H5 Credit for TFN amounts withheld from payments from closely held trusts
• H6 Credit for interest on no-TFN tax offset
• H8 Credit for foreign resident capital gains withholding amounts
• K PAYG instalments raised.

• Follow the fund instructions to calculate C2 Rebates and tax offsets amount (refer to the section for C2).

Step 2 Work out the following amounts:

• add T1 and J, write the result at B
• add C1 and C2, write the result at C
• add D1, D2, D3 and D4, write the result at D
• add E1, E2, E3 and E4, write the result at E

Step 3 Work out the amount at T2 Subtotal 1 (refer to the section for T2 for examples and more information) as follows.

• If the amount at C is less than the amount at B Gross tax:
• take C away from B
• write the result at T2
• go to step 4.

• If the amount at C is more than or equal to the amount at B:
• write zero at T2, T3 and T5 Tax payable
• copy the amount at E to I Tax offset refunds (Remainder of refundable tax offsets)
• go to step 6.

Step 4 Work out the amount at T3 Subtotal 2 (refer to the section for T3 for examples and more information) as follows.

• If the amount at D is less than the amount at T2 Subtotal 1:
• take D away from T2
• write the result at T3
• go to step 5.

• If the amount at D is more than or equal to the amount at T2:
• write 0 (zero) at T3 and T5 Tax payable
• copy the amount at E to I Tax offset refunds (Remainder of refundable tax offsets)
• keep a record of any excess offsets that can be carried forward to reduce income tax payable in a future year
• go to step 6.

Step 5 Work out the amount at T5 (refer to the section for T5 for examples and more information) as follows.

• If the amount at E is less than the amount at T3:
• take E away from T3
• write the result at T5
• go to step 6.

• If the amount at E is more than or equal to the amount at T3:
• take T3 away from E
• write the result at I
• write zero at T5
• go to step 6.

Step 6 Work out the amount at H by adding from H1 to H8.

Step 7 For the amount at S, add T5 and G, and then subtract H, I and K:

• if the amount at S is positive, that amount is payable by the fund
• if the amount at S is negative, that amount is refundable to the fund.

## 12. Income tax calculation statement

### A Taxable income

Show at A the fund's taxable income.

A is mandatory. You must include an amount at A even if it is zero (if zero write 0).

This amount is the amount shown at O Taxable income or loss item 11 when the Loss code box is blank.

### T1 Tax on taxable income

Show at T1 the amount of tax payable before the allowance of any rebates, tax offsets, and credits. T1 reflects the amount at A (or components of it) multiplied by the applicable tax rate or tax rates. The tax rates potentially applicable are listed in Appendix 3: Rates of tax.

T1 is mandatory. You must include an amount at T1 even if it is zero (if zero write 0).

The compliance status of the fund affects the tax rates that apply. If the fund is a regulated superannuation fund, ADF or PST and has not received a Notice of non-compliance from APRA, 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%.

Different tax rates apply to the following types of income and you must ensure that you apply the correct tax rate to amounts shown at:

• U Net non-arm's-length income item 10 (the tax rate is 45% even for a complying fund)
• T Assessable income due to changed tax status of fund item 10 (tax rate may be either 15% or 45% depending on the circumstances).

If you have shown an amount (other than zero) at R3 No-TFN-quoted contributions then this amount has been included in the amount at A Taxable income and is therefore included in the calculation of the amount at T1 calculated at the standard rate of tax applicable to the fund (that is, 15% for a complying fund or 45% for a non-complying fund) to the amount at A. Show at J the additional tax calculated (that is, at the rate of 32% for a complying fund or 2% for a non-complying fund) on the R3 amount.

Use examples 5, 6 and 7 to help you calculate the tax on taxable income amount.

### J Tax on no-TFN-quoted contributions

Show at J the amount of additional tax payable on no-TFN-quoted contributions shown at R3 No-TFN-quoted contributions (32% for complying superannuation funds and 2% for non-complying superannuation funds of the R3 amount). If the amount shown at R3 is zero, then the amount you show at J is zero.

J is mandatory. You must include an amount at J even if it is zero (if zero write 0).

You must include at T1 Tax on taxable income the tax calculated at the standard rate on no-TFN-quoted contributions included in taxable income. That is, 15% for a complying fund or 45% for a non-complying fund of the R3 amount.

Use Example 4 to help you calculate tax on no-TFN-quoted contributions.

For more information on the applicable tax rates, see Appendix 3: Rates of tax.

### B Gross tax

Show at B the total of the amounts at T1 and J.

Use examples 4 and 5 to help you calculate the gross tax amount.

Example 4: Income tax calculation: Superannuation fund showing income at R3 No-TFN-quoted contributions item 10

Example 4a: 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 who opened their account either:

• on or after 1 July 2007, or
• before 1 July 2007 but the assessable contributions made for the member in the income year exceeded \$1,000.

The fund has also incurred \$1,000 in deductible administration expenses (shown at Q item 11). The superannuation fund’s taxable income is \$9,000 (shown at O item 11).

For the purposes of calculating the amount to be shown at J Tax on no-TFN-quoted contributions, T1 Tax on taxable income and B Gross tax, work out the amount of tax as follows:

Assessable income

Tax return label

Amount
\$

Rate
%

Tax
\$

No-TFN-quoted contributions
(amount from R3 item 10, tax amount shown at J item 12)

2,000

32

640

Assessable employer contributions
(from R1 item 10)

8,000

-

-

Assessable contributions
(from R item 10)

10,000

-

-

Total assessable income
(from V item 10)

10,000

-

-

less:

Deductions

Tax return label

Amount
\$

Rate
%

Tax
\$

(from Q item 11)

1,000

-

-

Taxable income
(from A item 12, tax amount shown at T1 item 12)

9,000

15

1,350

Gross tax
(shown at B item 12)

-

-

1,990

The amount of gross tax (shown at B item 12) is the sum of the no-TFN-quoted contributions tax (shown at J item 12) and the tax (shown at T1 item 12) worked out on the taxable income shown at A item 12.

End of example

For more information on the applicable tax rates, see Appendix 3.

Example 4b: Non-complying superannuation fund

If the Natalie Superannuation Fund is a non-complying fund, most of its income is taxed at the rate of 45%, but a tax rate of 47% applies to any no-TFN-quoted contributions.

You would calculate J Tax on no-TFN-quoted contributions, T1 Tax on taxable income, and B Gross tax as follows:

Assessable income

Tax return label

Amount
\$

Rate
%

Tax
\$

No-TFN-quoted contributions
(amount from R3 item 10, tax amount shown at J item 12)

2,000

2

40

Assessable employer contributions
(from R1 item 10)

8,000

-

-

Assessable contributions
(from R item 10)

10,000

-

-

Total assessable income
(from V item 10)

10,000

-

-

less…

Deductions

Tax return label

Amount
\$

Rate
%

Tax
\$

(from Q item 11)

1,000

-

-

Taxable income
(from A item 12, tax amount shown at T1 item 12)

9,000

45

4,050

Gross tax
(shown at B item 12)

-

-

4,090

The amount of gross tax (shown at B item 12) is the sum of the no-TFN-quoted contributions tax (shown at J item 12) and the tax (shown at T1 item 12) worked out on the taxable income shown at A item 12.

End of example

For more information on the applicable tax rates, see Appendix 3.

Example 4c: 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 income year exceeded \$1,000.

Show the \$2,000 at R3 item 10 and also at R item 10.

The fund has also incurred \$3,000 in deductible administration expenses (shown at Q item 11). The fund's taxable income is \$1,000 loss (shown at O item 11). The taxable income shown at A item 12 is \$0.

Assessable income

Tax return label

Amount
\$

Rate
%

Tax
\$

No-TFN-quoted contributions
(amount from R3 item 10, tax amount shown at J item 12)

2,000

32

640

Assessable contributions
(from R item 10)

2,000

-

-

Total assessable income
(from V item 10)

2,000

-

-

less…

Deductions

Tax return label

Amount
\$

Rate
%

Tax
\$

(from Q item 11)

3,000

-

-

Taxable income
(from A item 12, tax amount shown at T1 item 12)

0

15

0

Gross tax
(shown at B item 12)

-

-

640

Gross tax of \$640 is payable even though the fund made a loss for the income year.

End of example

For more information on the applicable tax rates, see Appendix 3.

Example 5: Superannuation fund showing income at U Net non-arm's-length income item 10

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 unfranked dividends from two different private companies. 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. Of the \$4,000 private company dividends, the \$2,000 received from one company is treated as non-arm's-length income. The net non-arm's-length income is taxed at 45%.

Deductible arm's length expenses attributable to non-arm's-length income are \$100. These expenses can be deducted 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. Accordingly an amount of \$1,900 is shown at U item 10.

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 deductible administration expenses (shown at Q item 11) that are not considered to be attributable to the earning of the non-arm's-length income.

The fund’s taxable income is \$11,400 (shown at A item 12).

Assessable income

Tax return label

Amount
\$

Rate
%

Tax
\$

Assessable contributions
(from R item 10)
plus

10,000

-

-

Private company dividends (arm’s length income)
(from J item 10)
plus

2,000

-

-

Net private company dividends (non-arm's-length income)
(from U item 10)

1,900

-

-

Total assessable income
(from V item 10)

13,900

-

-

less…

Deductions

Tax return label

Amount
\$

Rate
%

Tax
\$

(from Q item 11)

2,500

-

-

Taxable income (from A item 12)

11,400

-

-

Components of taxable income

Income component

Amount
\$

Rate
%

Tax
\$

Non-arm's-length component

1,900

45

855

Low tax component (that is other taxable income)

9,500

15

1,425

Tax on taxable income (shown at T1 item 12)

-

-

2,280

The amount of \$2,280 is shown at T1 item 12 and also at B Gross Tax as in this example, the no-TFN-quoted contributions are nil.

End of example

### Priority of use of the tax offsets

Funds have access to three types of tax offsets:

• non-refundable non-carry forward tax offsets
• non-refundable carry forward tax offsets
• refundable tax offsets.

The first category of tax offsets to be applied against gross tax is C Non-refundable non-carry forward tax offsets. As the name of this category suggests, if the tax offsets are greater than the gross tax, the excess of offsets is lost. If B Gross tax is greater than the offsets at C the remaining tax is shown at T2 Subtotal 1.

The second category of tax offsets is D Non-refundable carry forward tax offsets. These offsets reduce any remaining tax at T2. If the tax offsets are greater than T2, the remaining tax will be reduced to zero and the excess of offsets will be carried forward to a later income year (subject to the tax offset carry forward rules in Division 65 of the ITAA 1997). If T2 is greater than the offsets at D the remaining tax is shown at T3 Subtotal 2.

The third category of offsets is E Refundable tax offsets. If the fund is entitled to any refundable tax offsets, the offsets reduce any remaining tax at T3. If the remaining tax is reduced to zero and not all refundable tax offsets have been used up (that is, the E Refundable tax offsets amount exceeds the remaining tax at T3), show the excess of refundable tax offsets at I Tax offset refunds (Remainder of refundable tax offsets). If refundable tax offsets are less than the remaining tax at T3 the shortfall becomes your tax payable amount at T5 Tax payable.

Labels I and T5 are mandatory. You must include an amount at I and T5 even if the amount is zero (if zero write 0).

Any amount at G Section 102AAM interest charge is payable and is added to the T5 amount.

K PAYG instalments raised (rather than just paid) on activity statements and other credits included under H Eligible credits, along with any amount at I Tax offset refunds (Remainder of refundable tax offsets) will be applied against the tax payable amount to determine the amount due to be paid by the fund or refundable to the fund.

### C Non-refundable non-carry forward tax offsets

Show at C the total of the amounts at C1 and C2.

The rebates and tax offsets shown at C are not refundable nor are they carried forward. They are only offset against gross tax to reduce it to zero. If these tax offsets are greater than the gross tax, the excess tax offsets cannot be used and are lost. See example 6a and example 6b.

### C1 Foreign income tax offset

Show at C1 the self-determined amount that is the fund’s foreign income tax offset.

The fund may be able to claim a foreign income tax offset where it has paid foreign income tax on an amount included in its assessable income. The fund’s foreign income tax offset cannot exceed the lesser of:

• the foreign income tax paid (or taken to have been paid)
• its foreign income tax offset limit (the greater of \$1,000 and the amount calculated under paragraph 770-75(2)(b) of the ITAA 1997).

To calculate the foreign income tax offset, see the Guide to foreign income tax offset rules 2021 (NAT 72923).

If the fund received franked distributions directly or indirectly from a New Zealand franking company, see Trans-Tasman imputation.

### C2 Rebates and tax offsets

Show at C2 the total of rebates and tax offsets available.

Do not include the amounts giving rise to the tax rebate and tax offset.

If the fund is a complying superannuation fund, complying ADF or PST, do not include franking credits that relate to either dividends (including non-share dividends) received or assessable dividends from a New Zealand franking company. Include these at E1 Complying fund's franking credits tax offset.

If the fund is a non-complying superannuation fund or a non-complying ADF, the tax offset of franking credits that relate to franked dividends received (including franked non-share dividends and assessable franked dividends from a New Zealand franking company) is not refundable. Show the amount of the franking credits at C2. Make sure you have included the amount of franking credits as appropriate at item 10 at I Gross distribution from partnerships, L Dividend franking credit, P Trust distributions franking credit, E Australian franking credits from a New Zealand company and U Net non-arm's-length income.

If the fund is claiming a no-TFN tax offset for tax paid on no-TFN-quoted contributions in one of the most recent three income years ending before 2020–21, do not claim the tax offset here. Claim the tax offset at E2 No-TFN tax offset.

### T2 Subtotal 1

Show at T2 the subtotal of tax payable after C Non-refundable non-carry forward tax offsets has been offset against B Gross tax.

T2 cannot be less than zero.

Work out the amount at T2 as follows.

• If the amount at C is less than the amount at B (see example 6a):
• take C away from B
• write the result at T2.

• If the amount at C is more than or equal to the amount at B (see example 6b):
• write 0 (zero) at T2, T3 and T5
• copy the amount at E to I Tax offset refunds (remainder of refundable tax offsets). I is mandatory. You must include an amount at I even if it is zero (if zero write 0).

Example 6: Calculating T2 Subtotal 1

Example 6a: Applying C Non-refundable non-carry forward tax offsets when B Gross tax is greater than offsets – a tax payable position

Dark Blue Superannuation Fund has the following amounts entered into its fund income tax return:

Label ID

Label description

Amount
\$

A

Taxable income

10,000

B

Gross tax

1,500

C

Non-refundable non-carry forward tax offsets

500

T2

Subtotal 1

1,000

D

Non-refundable carry forward tax offsets

0

T3

Subtotal 2

1,000

E

Refundable tax offsets

0

T5

Tax payable

1,000

I

Tax offset refunds (remainder of refundable tax offsets)

0

S

Amount due or refundable

1,000

Dark Blue Superannuation Fund has \$500 of non-refundable non-carry forward tax offsets to offset against \$1,500 gross tax, resulting in \$1,000 of tax payable.

End of example

Example 6b: Applying C Non-refundable non-carry forward tax offsets when B Gross tax is less than offsets – a nil tax payable position

Light Blue Superannuation Fund has the following amounts entered into its fund income tax return:

Label ID

Label description

Amount
\$

A

Taxable income

10,000

B

Gross tax

1,500

C

Non-refundable non-carry forward tax offsets

2,000

T2

Subtotal 1

0

D

Non-refundable carry forward tax offsets

0

T3

Subtotal 2

0

E

Refundable tax offsets

0

T5

Tax payable

0

I

Tax offset refunds (remainder of refundable tax offsets)

0

S

Amount due or refundable

0

Light Blue Superannuation Fund has \$2,000 of non-refundable non-carry forward tax offsets to offset against \$1,500 gross tax resulting in \$0 tax payable. Light Blue Superannuation Fund cannot utilise or carry forward \$500 of the non-refundable non-carry forward tax offsets.

End of example

### D Non-refundable carry forward tax offsets

If the total of the non-refundable carry forward tax offsets at D is greater than the remaining tax at T2, the excess may be carried forward to a future income year. If the amount at T2 is greater than the total of the non-refundable carry forward tax offsets at D, the remaining tax is shown at T3 Subtotal 2.

Write at D the total of:

• D1 Early stage venture capital limited partnership tax offset
• D2 Early stage venture capital limited partnership tax offset carried forward from previous year
• D3 Early stage investor tax offset, and
• D4 Early stage investor tax offset carried forward from previous year.

If you did not write an amount at D1, D2, D3 or D4, leave D blank.

The tax offsets shown at D are not refundable.

### D1, D2 Early stage venture capital limited partnership (ESCLVP) tax offset

The fund may be able to claim the ESVCLP tax offset if one or both of the following apply:

• it is entitled to the ESVCLP tax offset in the income year
• it has an amount of unused ESVCLP tax offset carried forward from a previous income year.

#### D1 Early stage venture capital limited partnership tax offset

Is the fund entitled to claim an ESVCLP tax offset for contributions made during the year?

No Leave D1 blank. Go to D2. Read on.

The fund's 2020–21 ESVCLP tax offset is the sum of its tax offsets, based on the fund's contributions to the ESVCLP:

• as a limited partner of the ESVCLP, or
• through a partnership or trust.

The ESVCLP must have become unconditionally registered on or after 7 December 2015.

If the fund is a limited partner of an ESVCLP, the fund's tax offset is limited to 10% of the lesser of the following:

• the fund's total contributions to the ESVCLP during the income year (certain exclusions apply), and
• the fund's share (based on the fund's interest in the entire capital of the ESVCLP at the end of the income year) of the sum of eligible venture capital investments made by the ESVCLP during the period at the start of the income year and ending two months after the end of the income year.

If the fund is a partner in a partnership or a beneficiary of a trust which has contributed to an ESVCLP, the fund may be entitled to an amount of ESVCLP tax offset. A written notification will be provided by the partnership or trustee of the trust setting out the fund's entitlement to this tax offset. If a written notification has not been provided, contact the partnership or the trustee.

Write the total amount of the ESVCLP tax offsets at D1.

For more information about the ESVCLP tax offset and eligibility requirements, see ESVCLP tax incentives and concessions.

#### D2 Early stage venture capital limited partnership tax offset carried forward from previous year

Does the fund have an amount of unused ESVCLP tax offset carried forward from a previous year?

No Leave D2 blank. Go to D3. Read on.

To work out whether the fund can carry forward an amount of ESVCLP tax offset from a previous year to 2020–21, see Division 65 of the ITAA 1997.

The unused ESVCLP tax offset carried forward from a previous year may need to be adjusted for any net exempt income.

The unused ESVCLP tax offset carried forward from a previous year is reduced by 30 cents for every dollar of unused net exempt income, provided the fund had taxable income for that year.

Write at D2 the amount of unused ESVCLP tax offset carried forward from the previous year, less any reductions, if applicable.

For more information, see ESVCLP tax incentives and concessions.

### D3, D4 Early stage investor tax offset

The fund may be entitled to the early stage investor tax offset for the income year if the fund:

• invested in an early stage innovation company during the year, or
• has an amount of unused early stage investor tax offset carried forward from a previous year.

The maximum offset (including current year and carried forward prior year amounts) that the fund, and its affiliates combined, can claim in 2020–21 is \$200,000.

#### D3 Early stage investor tax offset

Is the fund entitled to claim an early stage investor tax offset in 2020–21?

No Leave D3 blank. Go to D4. Read on.

Step 1: Work out the total amount the fund paid for eligible shares in all early stage innovation companies in the income year.

If the requirements of the 'sophisticated investor' test under the Corporations Act 2001 are not met for at least one of the investments made in an early stage innovation company during the year, the step 1 amount must not exceed \$50,000. If the step 1 amount exceeds \$50,000 the fund cannot claim this offset.

Step 2: Multiply the step 1 amount by 20%.

Step 3: Identify the fund's entitlements to any early stage investor tax offsets as a beneficiary of a trust or a partner in a partnership that has invested in an early stage innovation company during the year.

If the fund is a partner in a partnership or a beneficiary of a trust which has invested in an early stage innovation company during the income year, the fund may be entitled to an early stage investor tax offset. Written notification will be provided by the partnership or trustee of the trust, setting out the fund's entitlement to this tax offset. If written notification has not been provided, contact the partnership or the trustee.

Step 4: Add together the amounts at step 2 and step 3. This is the step 4 amount.

Step 5: Subtract from \$200,000 the amount (if any) shown at D4 Early stage investor tax offset carried forward from previous year. This is the step 5 amount.

Step 6: If the step 4 amount is equal to or less than the step 5 amount, write the step 4 amount at D3.

If the step 4 amount is greater than the step 5 amount, write the step 5 amount at D3.

The amount shown at D3 may need to be further reduced if any of the fund’s affiliates are entitled to the early stage investor tax offset, whether for investments they made in 2020–21 or carried forward from a previous year.

The maximum offset (including current year and carried forward prior year amounts) that the fund, and its affiliates combined, can claim in 2020–21 is \$200,000.

#### D4 Early stage investor tax offset carried forward from previous year

Does the fund have an amount of unused early stage investor tax offset carried forward from a previous year?

No Leave D4 blank. Go to D. Read on.

To work out whether the fund can carry forward an amount of the early stage investor tax offset from a previous year, see Division 65 of the ITAA 1997.

The unused early stage investor offset carried forward from a previous year may need to be adjusted for any net exempt income.

The unused early stage investor tax offset carried forward from a previous year is reduced by 30 cents for every dollar of unused net exempt income, provided the fund had taxable income for that year.

Write at D4 the amount of unused early stage investor tax offset carried forward from a previous year, less any reductions if applicable.

Example: Calculating early stage investor tax offset

The Retiresoon Fund has a carried forward early stage investor tax offset of \$60,000 from 2019–20.

In 2020–21, the Retiresoon Fund invested \$500,000 in eligible shares in one early stage innovation company, and \$250,000 in another. The Retiresoon Fund meets the requirements of the sophisticated investor test.

The Retiresoon Fund has gross tax of \$180,000 at B, no amounts at C (non-refundable non-carry forward offsets) and no exempt income.

The amount that the Retiresoon Fund writes at D4 is \$60,000. It calculates the amount reported at D3 as:

Step 1: The total amount paid for eligible shares in the early stage innovation companies in 2020–21 = \$750,000.

Step 2: Multiply step 1 amount (\$750,000) by 20% = \$150,000.

Step 3: Nil – The Retiresoon Fund has no early stage investor entitlements via trusts or partnerships.

Step 4: The Retiresoon Fund adds the amounts from steps 2 and 3. The result is \$150,000.

Step 5: The Retiresoon Fund subtracts the amount at D4 (\$60,000) from \$200,000. The result is \$140,000.

Step 6: As the step 4 amount (\$150,000) is greater than the step 5 amount (\$140,000), the Retiresoon Fund writes \$140,000 at D3.

The Retiresoon Fund can claim an early stage investor tax offset equal to the sum of the D4 and D3 amounts (\$60,000 plus \$140,000, totalling \$200,000). Although the carried forward tax offset from 2019–20 of \$60,000 and the current year tax offset of \$150,000 (step 4 amount) equals \$210,000, the Retiresoon Fund's total tax offset is capped at \$200,000 for 2020–21. The unused excess of \$10,000 cannot be carried forward to future income years.

As the Retiresoon Fund's entitlement to the tax offset (\$200,000) is greater than its gross tax payable (\$180,000), the unused portion of the offset (\$20,000) may be carried forward to future income years (subject to the rules in Division 65).

End of example

For more information about the early stage investor tax offset and the eligibility requirements, see Tax incentives for early stage investors.

### T3 Subtotal 2

Show at T3 the subtotal of tax payable after D Non-refundable carry forward tax offsets has been offset against T2 Subtotal 1.

T3 cannot be less than zero.

Work out the amount at T3 as follows.

• If the amount at D is less than the amount at T2 (see example 7a):
• take D away from T2
• write the result at T3.

• If the amount at D is more than or equal to the amount at T2 (see example 7b):
• Write 0 (zero) at T3 and T5
• copy the amount at E to I Tax offset refunds (remainder of refundable tax offsets). I is mandatory. You must include an amount at I even if it is zero (if zero write 0).

Example 7: Calculating T3 Subtotal 2

Example 7a: Applying D Non-refundable carry forward tax offsets when T2 Subtotal 1 is greater than offsets – a tax payable position

Dark Blue Superannuation Fund has the following amounts entered into its fund income tax return:

Label ID

Label description

Amount
\$

A

Taxable income

10,000

B

Gross tax

1,500

C

Non-refundable non-carry forward tax offsets

0

T2

Subtotal 1

1,500

D

Non-refundable carry forward tax offsets

500

T3

Subtotal 2

1,000

E

Refundable tax offsets

0

T5

Tax payable

1,000

I

Tax offset refunds (remainder of refundable tax offsets)

0

S

Amount due or refundable

1,000

Dark Blue Superannuation Fund has \$500 of non-refundable carry forward tax offsets, comprising the total of early stage venture capital limited partnership tax offsets (D1) and early stage investor tax offsets (D3), to offset against \$1,500 gross tax, resulting in \$1,000 of tax payable.

End of example

Example 7b: Applying D Non-refundable carry forward tax offsets when T2 Subtotal 1 is less than offsets – a nil tax payable position

Light Blue Superannuation Fund has the following amounts entered into its fund income tax return:

Label ID

Label description

Amount
\$

A

Taxable income

10,000

B

Gross tax

1,500

C

Non-refundable non-carry forward tax offsets

0

T2

Subtotal 1

1,500

D

Non-refundable carry forward tax offsets

2,000

T3

Subtotal 2

0

E

Refundable tax offsets

0

T5

Tax payable

0

I

Tax offset refunds (remainder of refundable tax offsets)

0

S

Amount due or refundable

0

Light Blue Superannuation Fund has \$2,000 of non-refundable carry forward tax offsets, comprising the total of early stage venture capital limited partnership tax offsets (D1) and early stage investor tax offsets (D3) to offset against \$1,500 gross tax resulting in \$0 tax payable. Light Blue Superannuation Fund will carry forward \$500 of the non-refundable carry forward tax offsets for use in a later income year.

End of example

### E Refundable tax offsets

Show at E the total of the amounts at E1, E2, E3 and E4.

The tax offsets shown at E are refundable, although they must first be offset against gross tax to reduce it to zero, if there is any gross tax to be paid after C and D have been applied. Any excess of refundable tax offsets is shown at I Tax offset refunds (Remainder of refundable tax offsets) and is applied in calculating the fund’s amount due or refundable. See example 9a and example 9b.

### E1 Complying fund’s franking credits tax offset

Subject to the fund satisfying the holding period rule and related payment rule, a complying superannuation fund, complying ADF or PST is entitled to a refundable franking credits tax offset in respect of franked dividends received (including franked non-share dividends and assessable franked dividends from a New Zealand franking company).

Show at E1 the amount of franking credits that relate to franked dividends received including franked non-share dividends and assessable franked dividends from a New Zealand franking company. Make sure you have included the amount of franking credits in the assessable income shown at:

• I Gross distribution from partnerships item 10
• L Dividend franking credit item 10
• P Trust distributions franking credit item 10
• E Australian franking credits from a New Zealand company item 10
• U Net non-arm's length income item 10.

If the fund is a non-complying superannuation fund or a non-complying ADF, the fund is entitled to a non-refundable tax offset of franking credits that relate to franked dividends received (including franked non-share dividends and assessable franked dividends from a New Zealand franking company) against the income tax liability of the fund. Show the amount of the franking credits at C2 Rebates and tax offsets. Make sure you have included the amount of franking credits in as appropriate at item 10 at I Gross distribution from partnerships, L Dividend franking credit, P Trust distributions franking credit, E Australian franking credits from a New Zealand company and U Net non-arm's length income.

Do not show at E1 any credits that the fund is entitled to have applied against its 2020–21 tax liability. These credits are shown elsewhere, for example, at K PAYG instalments raised.

A dividend from a New Zealand franking company may also carry New Zealand imputation credits. An Australian resident cannot claim New Zealand imputation credits.

### E2 No-TFN tax offset

Show at E2 the no-TFN tax offset claimed.

A fund is entitled to a refundable no-TFN tax offset for 2020–21 if:

• tax was payable by the fund on an amount of no-TFN-quoted contributions in one of the most recent three income years ending before 2020–21 and
• the no-TFN-quoted contributions were made to the fund to provide superannuation benefits for an individual who has quoted (for superannuation purposes) their TFN to the fund for the first time in 2020–21.

The no-TFN tax offset is the total amount of the additional tax payable on amounts of no-TFN-quoted contributions for which both of the above conditions have been met.

A successor fund is entitled to a refundable no-TFN tax offset for 2020–21 if:

• tax was payable by the previous original fund on an amount of no-TFN-quoted contributions in 2020–21 (the year in which the successor fund transfer occurred) or one of the most recent three income years ending before 2020–21, and
• the no-TFN-quoted contributions were made to the previous original fund to provide superannuation benefits for an individual who has never quoted (for superannuation purposes) their TFN to the previous original fund and has quoted their TFN to the successor fund for the first time in 2020–21.

The no-TFN tax offset is the total amount of the additional tax payable on amounts of no-TFN-quoted contributions for which both of the above conditions have been met.

Example 8: Superannuation fund showing a credit at E2 No-TFN tax offset

The Margarita Superannuation Fund is a complying fund. The fund reported \$10,000 no-TFN-quoted contributions in its 2018–19 tax return and paid additional tax (at 32%) of \$3,200 on those no-TFN-quoted contributions.

The no-TFN-quoted contribution income included \$2,000 of assessable contributions made by Julie, as she had not provided her TFN to the fund by 30 June 2019. For the no-TFN-quoted contributions attributed to Julie, the fund paid additional tax of \$640. Julie provided her TFN to the fund on 30 September 2020.

In its 2020–21 tax return, the fund is entitled to claim a no-TFN tax offset for the additional tax of \$640 paid on the \$2,000 no-TFN-quoted contributions reported in the fund’s 2018–19 tax return. The \$640 is included at E2 item 12.

End of example

### E3 National rental affordability scheme (NRAS) tax offset

Show at E3 the amount of NRAS tax offset entitlement.

The refundable tax offset is only available where the Housing Secretary from the Department of Social Services has issued a certificate under the NRAS. In order to claim the offset in 2020–21, the NRAS certificate must relate to the NRAS year comprising the period 1 May 2020 to 30 April 2021.

For more information, see National rental affordability scheme – taxation issues.

### E4 Exploration Credits Tax Offset

Show at E4 the amount of exploration credits received during the income year.

A fund may be entitled to a tax offset for exploration credits received during the income year if it was an Australian resident for the whole of the income year.

The amount of the tax offset is the total value of exploration credits the fund received in the income year. However, special rules may apply where the fund has received exploration credits from a partnership or a trust.

### T5 Tax payable

Show at T5 the amount of tax payable after the amount at E has been offset against the amount at T3.

T5 cannot be less than zero.

T5 is mandatory. You must include an amount at T5 even if it is zero (if zero write 0).

Work out the amount at T5 as follows.

• If the amount at E is less than the amount at T3 (see example 9a):
• take E away from T3
• write the result at T5.

• If the amount at E is more than or equal to the amount at T3 (see example 9b):
• take T3 away from E
• write the result at I
• write 0 (zero) at T5.

Example 9: Calculating T5 Tax payable

Example 9a: Applying E Refundable tax offsets when B Gross tax is greater than tax offsets (this is a payable position)

Dark Red Superannuation Fund has shown the following amounts on its fund tax return:

Label ID

Label description

Amount
\$

A

Taxable income

40,000

B

Gross tax

6,000

C

Non-refundable non-carry forward tax offsets

2,000

T2

Subtotal 1

4,000

D

Non-refundable carry forward tax offsets

0

T3

Subtotal 2

4,000

E

Refundable tax offsets

3,000

T5

Tax payable

1,000

G

Section 102AAM interest charge

200

H

Eligible credits

250

I

Tax offset refunds (Remainder of refundable tax offsets)

0

K

PAYG instalments raised

750

S

Amount due or refundable

200

Dark Red Superannuation Fund has an entitlement of \$2,000 of non-refundable non-carry forward tax offset and \$3,000 of refundable tax offset to be used to offset against \$6,000 gross tax, so:

• tax payable has been reduced to \$1,000 (T5)
• there is no refundable tax offset to be carried into I (write 0 at I)
• add the \$200 (G) to the \$1,000 (T5) to increase the liability to \$1,200
• subtract the \$250 (H) and the \$750 (K) from the \$1,200

S will show a \$200 amount due.

End of example

Example 9b: Applying E Refundable tax offsets when B Gross tax is less than tax offsets (this is a refundable position)

Light Red Superannuation Fund has shown the following amounts entered on its fund tax return:

Label ID

Label description

Amount
\$

A

Taxable income

40,000

B

Gross tax

6,000

C

Non-refundable non-carry forward tax offsets

2,000

T2

Subtotal 1

4,000

D

Non-refundable carry forward tax offsets

0

T3

Subtotal 2

4,000

E

Refundable tax offsets

5,000

T5

Tax payable

0

G

Section 102AAM interest charge

300

H

Eligible credits

540

I

Tax offset refunds (Remainder of refundable tax offsets)

1,000

K

PAYG instalments raised

850

S

Amount due or refundable

2,090

Light Red Superannuation Fund has an entitlement of \$2,000 of non-refundable non-carry forward tax offsets and \$5,000 of refundable tax offsets to be used to offset against \$6,000 gross tax, so:

• tax payable has been reduced to \$0 (T5)
• the \$1,000 of refundable tax offsets remaining, is transferred to I
• add the \$300 (G) to the \$0 (T5) to increase the liability to \$300
• subtract the \$540 (H), \$1,000 (I) and the \$850 (K) from the \$300

S will show a \$2,090 refundable amount.

End of example

### G Section 102AAM interest charge

Show at G the amount of interest calculated under section 102AAM of the ITAA 1936 in respect of a distribution received from a non-resident trust. Section 102AAM of the ITAA 1936 imposes an interest charge on certain distributions from non-resident trusts.

For more information, see Foreign income return form guide 2021.

### H Eligible credits

Show at H the total of the amounts at:

• H1 Credit for interest on early payments - amount of interest
• H2 Credit for tax withheld - foreign resident withholding (excluding capital gains)
• H3 Credit for tax withheld - where ABN or TFN not quoted (non-individual)
• H5 Credit for TFN amounts withheld from payments from closely held trusts
• H6 Credit for interest on no-TFN tax offset
• H8 Credit for foreign resident capital gains withholding amounts

### H1 Credit for interest on early payments – amount of interest

Show at H1 only the calculated interest amount of 50 cents or more for early payments. Do not show actual payments.

Interest may be payable where an actual payment is made on account of certain amounts more than 14 days before the due date of payment. Amounts that may attract early payment interest include payments of:

• income tax
• shortfall interest charge
• interest payable under section 102AAM of the ITAA 1936.

Amounts that are not directly paid to us, but which are reduced by crediting or applying an amount do not attract early payment interest. These amounts include:

• credit for instalments payable under the PAYG instalment regime
• credit for amounts withheld from withholding payments under the PAYG withholding regime
• an overpayment of other income tax liabilities
• a running balance account (RBA) surplus
• any other credit entitlement arising under a taxation law.

Early payment interest is also not payable on any part of the payment that:

• exceeds the amount due
• attracts interest on overpayment.

Early payment interest is calculated from the date the early payment is made to the date the amount becomes due and payable. However, if you pay an amount early on account of a tax liability, and we refund it before the due date of the liability, interest will not accrue for the period after the date on which we refund the amount.

Date of payment is:

• the date shown on the receipt
• the date the payment is posted to us, plus three business days, or
• the date shown on the fund's bank statement if payment is made through direct debit, that is, electronic funds transfer (EFT).

#### Table 5: Interest rates on early payments

Quarter

Interest rate (pa)

Jul–Sep 2020

0.10%

Oct–Dec 2020

0.10%

Jan–Mar 2021

0.02%

Apr–Jun 2021

0.01%

If the early payment extends over two or more quarters, calculate the interest for the number of days in each quarter.

For 2020–21, interest for a quarter is calculated as follows:

Keep a record of the amount of early payment interest claimed. This interest is assessable income in the income year in which it is paid to the fund or credited against another fund liability.

### H2 Credit for tax withheld – foreign resident withholding (excluding capital gains)

Show at H2 the total amount of tax withheld from payments to the fund that were subject to foreign resident withholding in Australia. This includes the fund’s share of foreign resident withholding credits for amounts subject to such withholding and distributed to the fund from a partnership or trust.

You complete H2 only if the amount was withheld in Australia and remitted to the ATO.

Where a credit is claimed at H2 for tax withheld under foreign resident withholding, the corresponding gross payment must be included at I Gross distribution from partnerships, Q Trust distributions other amounts, or S Other income (see gross payments subject to foreign resident withholding) item 10.

Do not include credits for amounts withheld from foreign resident capital gains withholding at H2. Include this amount at H8.

### H3 Credit for tax withheld - where ABN or TFN not quoted (non-individual)

Show at H3:

• the total tax withheld from payments to the fund that were subject to withholding as the fund’s ABN or TFN was not quoted; this amount equals the sum for the amounts shown in the tax withheld boxes on the Non-individual PAYG payment summary schedule 2021, see Schedules

and

• any amounts withheld from investments because the fund’s TFN has not been quoted to the financial institution.

If a credit is shown at H3 for tax withheld because an ABN or TFN was not quoted, the corresponding gross payment must be included at H Gross payments where ABN not quoted item 10.

Do not include at H3 any contributions that have been received by the fund for a member who has not quoted their TFN; these are reported at R3 No-TFN-quoted contributions item 10.

### H5 Credit for TFN amounts withheld from payments from closely held trusts

Show at H5 the total amount withheld from payments where the fund has not provided its TFN to the trustee of a closely held trust that is subject to the TFN withholding rules.

The trustee of a closely held trust is required to withhold amounts from payments made to the fund if the fund did not provide a TFN. The rate of withholding is 49% (top rate plus Medicare levy) of the payments made.

Where amounts have been withheld the trustee of a closely held trust is required to provide a beneficiary with a payment summary in the approved form. The credit amount claimed at H5 appears on the payment summary.

Do not include at H5 amounts from any other withholding rules.

If a credit is reported at H5 for tax withheld, the corresponding gross payment is included as a trust distribution at N to Q, item 10 (as applicable), unless it is non-arm’s length income of the fund in which case it is included at U Net non-arm's length income item 10.

For more information about the TFN withholding rules for closely held trusts see TFN withholding for closely held trusts.

### H6 Credit for interest on no-TFN tax offset

Show at H6 the total calculated interest amount of 50 cents or more for interest payable on the no-TFN tax offset claimed at E2.

Interest on the no-TFN tax offset is only payable if all the following conditions are met:

• a member of the fund provided their TFN to their employer before the end of an income year (the past year, for example 2019–20)
• the employer was required by section 299C of the SISA to inform the fund of the individual’s TFN by the end of the past year, but did not do so
• as a result, the contributions made in respect of that member were no-TFN-quoted contributions income of the fund in that past year
• an amount of additional tax (which is the interest-bearing tax) that was payable in respect of the no-TFN-quoted contributions income counts towards the no-TFN tax offset under Subdivision 295-J of the ITAA 1997 for an income year (the current year, for example 2020–21) for the fund
• the no-TFN tax offset under that subdivision is applied when assessing the fund for the current year.

The interest is payable on each amount of interest-bearing tax.

Interest on tax that counts towards the no-TFN tax offset is calculated for the period between the later of:

• the day on which the amount of interest-bearing tax was paid
• the day by which the amount of interest-bearing tax was required to be paid

and

• the day on which the fund lodges its tax return for the current year (which is deemed to be the day on which the current year assessment is made).

The date of payment of the interest-bearing tax is:

• the date shown on the receipt
• the date the payment is posted to us, plus three business days, or
• the date shown on the fund's bank statement if payment is made through direct debit, that is, electronic funds transfer (EFT).

If the relevant interest period extends over two or more quarters, calculate the interest for the number of days in the interest period in each quarter. Example 10 has more information on how to calculate the amount of interest in such circumstances.

The rate of interest payable on the interest-bearing tax is the base interest rate determined under section 8AAD of the TAA 1953. Table 5 at H1 Credit for interest on early payments – amount of interest provides the applicable interest rates up to 30 June 2021.

Keep a record of the amount of interest payable on tax that counts towards the no-TFN tax offset. This interest is assessable income of the fund in the income year in which it is paid to the fund or credited against another fund liability.

Example 10: Superannuation fund showing a credit at H6 Credit for interest on no-TFN tax offset

The Caron Superannuation Fund is a complying fund and included \$10,000 no-TFN-quoted contributions in its 2019–20 tax return. An additional 32% tax amounting to \$3,200 was paid on these contributions. The fund’s due date for lodgment of its 2019–20 tax return and payment of tax was 31 March 2021. The fund was slightly overdue lodging its return and in paying its tax. It paid the full amount of tax owing including the additional \$3,200 tax on the no-TFN-quoted contributions on 7 April 2021.

During 2020–21, Ian, a member of the fund, provided his TFN to the fund after he noticed that his account had been debited with \$1,000 which was the amount of the additional tax paid on his no-TFN-quoted contributions. Ian made a statement to the fund saying he gave his TFN to his employer Adrian Pty Ltd when he completed a TFN declaration on 10 September 2019.

Caron Superannuation Fund prepares its 2020–21 tax return in March 2022 and anticipates that the return will be lodged on 31 March 2022.

At E2 on the fund’s 2020–21 tax return, Caron Superannuation Fund claims as a no-TFN tax offset the \$1,000 additional tax that was attributable to Ian’s no-TFN-quoted contributions. (Ian’s no-TFN-quoted contributions formed part of the \$10,000 reported in the fund’s 2019–20 tax return and on which the fund paid the additional \$3,200 tax.)

Interest on the \$1,000 additional tax that was paid and is now claimed as a no-TFN tax offset is calculated for the period from 7 April 2021 (the day on which the fund paid the tax) until 31 March 2022 (the day on which the fund lodges its 2020–21 tax return and the day on which the assessment is deemed to be made).

Superannuation fund showing a credit at H6 Credit for interest on no-TFN tax offset

Quarter

Number of days and interest rate calculation

Total
\$

Apr–Jun 2021

\$1,000 × (85 ÷ 365) × (1.77 ÷ 100)

4.121

Jul–Sep 2021

\$1,000 × (92 ÷ 365) × (1.77 ÷ 100)

4.461

Oct–Dec 2021

\$1,000 × (92 ÷ 365) × (1.77 ÷ 100)

4.461

Jan–Mar 2022

\$1,000 × (90 ÷ 365) × (1.77 ÷ 100)

4.364

Total interest

rounded to the nearest cent

17.41

Note 1: The total for each quarter is rounded to three decimal places.

Note 2: A generic base interest rate of 1.77 has been used for the purpose of this example.

The fund is entitled to claim credit for \$17.41 interest at H6.

End of example

### H8 Credit for foreign resident capital gains withholding amounts

Write at H8 the total amount of tax withheld from payments to the fund that were subject to foreign resident capital gains withholding in Australia. Include at H8 the fund’s share of foreign resident capital gains withholding credits distributed to the fund from its share of net income from a trust.

You should only claim at H8 a credit equal to the amount of foreign resident capital gains withholding paid by a purchaser to the ATO on your behalf. The ATO would have issued the Fund with confirmation of this amount.

Do not include credits for amounts withheld from foreign resident withholding at H8. Include these at H2 Credit for tax withheld – foreign resident withholding (excluding capital gains).

For more information, see Foreign resident capital gains tax withholding.

### I Tax offset refunds (Remainder of refundable tax offsets)

I is mandatory. You must include an amount at I even if it is zero (if zero write 0).

If the amount at E is less than or equal to the amount at T3, that is, there is no refundable tax offset amount remaining, then you must write 0 (zero) at I.

If the amount at E is greater than the amount at T3 the fund has an excess amount of refundable tax offsets remaining from E, you must show this amount at I. See Example 9a and Example 9b.

### K PAYG instalments raised

Show at K the total of the fund’s PAYG instalments for 2020–21, whether or not the instalments have actually been paid.

Include the following amounts in the total instalment amount:

• If the fund did not vary but used the instalment amounts worked out by us, show the amounts pre-printed at T7 on the fund’s activity statements or at T5 on the annual instalment activity statement.
• If the fund did not use the instalment amounts worked out by us, include the amounts which the fund reported at 5A on the fund’s activity statements, reduced by any credits the fund claimed at 5B.

To ensure the fund receives the correct amount of credit for its PAYG instalments, make sure all of its activity statements are finalised before lodging the tax return. If the fund is required to lodge its activity statements, it should do so even if it can’t pay on time, or had nothing to pay.

The fund is entitled to a credit for its PAYG instalments, even if it has not actually paid a particular instalment. However, the fund will be liable for the general interest charge on any outstanding instalment for the period from the due date for the instalment until the date it is fully paid.

### S Amount due or refundable

Show at S the balance of tax payable or refundable as indicated on the tax return.

The amount at S does not take into account any interim or voluntary payments that the fund has made against its income tax liability for 2020–21. If the fund has made such payments, take these into account in calculating the final payment but do not show the interim or voluntary payment amounts on this tax return.

For the amount at S, add T5 and G, and then subtract H, I and K

• If the amount at S is positive, that amount is payable by the fund.
• If the amount at S is negative, that amount is refundable to the fund.

We do not require a payment when the tax return is lodged. However, if you prefer to make a payment at this time, see Payment.

#### Record keeping

The fund must keep all documentation issued by financial institutions detailing payments of income and any TFN amounts deducted from those payments.

The fund must also maintain details of any TFN amounts deducted from an income payment made to the fund and subsequently refunded by their financial institution. The fund must keep a record of the following details for the refund:

• amount of refund received
• date of refund
• investment reference number, for example, the bank account number of the investment relating to the refund.

QC64893