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  • Section D: Income tax calculation statement

    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 2017–18.

    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
      • 47% 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:
      • 34% 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 (ESVCLP) tax offset
      • D2 Early stage investor tax offset
      • 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 and D2, write the result at D
    • add E1, E2, E3 and E4, write the result at E

    Step 3 Work out the amount at Subtotal 1 T2 (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 Subtotal 2 T3 (refer to the section for T3 for examples and more information) as follows.

    • If the amount at D is less than the amount at Subtotal 1 T2:
      • 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)
      • go to Step 6
      • keep a record of the excess to be carried forward and offset against any tax payable in a future year.
       

    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: Tax rates.

    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 47%.

    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 47% even for a complying fund)
    • T Assessable income due to changed tax status of fund item 10 (tax rate may be either 15% or 47% 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 47% for a non-complying fund) to the amount at A. Show at J the additional tax calculated (that is, at the rate of 34% 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 (34% 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 47% 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: Tax rates.

    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

    34

    680

    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
    $

    Administration expenses
    (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)

     

     

    2,030#

    # 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 47%, but a tax rate of 49% 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
    $

    Administration expenses
    (from Q item 11)

    1,000

     

     

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

    9,000

    47

    4,230

    Gross tax
    (shown at B item 12)

     

     

    4,270#

    # 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

    34

    680

    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
    $

    Administration expenses
    (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)

     

     

    680#

    # Gross tax of $680 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 47%.

    Deductible 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
    $

    Administration expenses
    (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

    47

    893

    Low tax component (that is other taxable income)

    9,500

    15

    1,425

    Tax on taxable income (shown at T1 item 12)

     

     

    2,318#

    #The amount of $2,318 is shown at T1 item 12 and also at B Gross Tax as in this example there are not any no-TFN-quoted contributions.

    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 Subtotal 1 T2.

    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 Subtotal 2 T3.

    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 (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 2016–17, 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.

    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.

    Non-refundable carry forward tax offsets reduce any remaining tax at T2 Subtotal 1. If the total of the non-refundable carry forward tax offsets is greater than the remaining tax at T2, the excess may be carried forward to a future income year.

    If the fund's gross tax is greater than the total of non-refundable carry forward tax offsets, the remaining tax is shown at T3 Subtotal 2.

    Show at D the total of the amounts at D1 and D2.

    D1 Early stage venture capital limited partnership (ESCVLP) tax offset

    A fund may be entitled to the ESVCLP tax offset if it contributed to an ESVCLP that became unconditionally registered on or after 7 December 2015.

    Is the fund entitled to the ESVCLP tax offset?

    No

    Leave D1 blank. Go to D2.

    Yes

    Read on.

    If the fund is a limited partner of the ESVCLP, the fund's ESVCLP 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 share 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 income year and within two months after the end of the income year.

    If the fund is a member of a partnership or a trust which is itself a limited partner of an ESVCLP, the partnership or the trustee of the trust will provide the fund with details of the fund's ESVCLP tax offset.

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

    For more information, see ESVCLP tax incentives and concessions.

    Legislation

    Subdivision 61-P of the Income Tax Assessment Act 1997External Link

    D2 Early stage investor tax offset

    The fund may qualify for the early stage investor tax offset for the income year if the fund invested in an early stage innovation company during the year.

    To qualify for this tax offset there are requirements that need to be satisfied by the investor and by the early stage innovation company.

    Are you entitled to the early stage investor tax offset?

    No

    Leave D2 blank. Go to D.

    Yes

    Read below and show at D2 the total of your early stage investor tax offset.

    Step 1: Work out the total amount the fund paid for newly issues shares in all qualifying early stage innovation companies during the 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 a qualifying 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 a qualifying eligible early stage innovation company during the year.

    The trustee of the trust or the partnership will provide a written notification of any entitlement. If a written notification has not been provided, contact the trustee or partnership.

    Step 4: Aggregate the amounts at Step 2 and Step 3 and include this amount at D2.

    The maximum amount of this offset that the fund (including affiliates) is entitled to in an income year is $200,000 (or $10,000 if the requirements of the 'sophisticated investor' test are not met).

    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 Subtotal 1 T2.

    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 (D2), to offset against $1,500 gross tax, resulting in $1,000 of tax payable.

    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 (D2) 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.

    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 2016–17 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 2016–17 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 2016–17 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 2016–17.

    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 2014–15 tax return and paid additional tax (at 34%) of $3,400 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 2016. For the no-TFN-quoted contributions attributed to Julie, the fund paid additional tax of $680. Julie provided her TFN to the fund on 30 September 2016.

    In its 2016–17 tax return, the fund is entitled to claim a no-TFN tax offset for the additional tax of $680 paid on the $2,000 no-TFN-quoted contributions reported in the fund’s 2015–16 tax return. The $680 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 2016–17, the NRAS certificate must relate to the NRAS year comprising the period 1 May 2016 to 30 April 2017.

    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.

    For more information, see:

    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 the following amounts entered into 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.

    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 the following amounts entered into 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.

    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 the calculated interest amount of 50 cents or more for early payments. Do not show the amount of the early payment.

    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 you do not pay directly to us, but which are reduced by the crediting or applying of 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 tax law.

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

    • exceeds the amount due or
    • 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 mailed to us, plus three working 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 on early payments
    The rates of interest on early payments for 2016–17

    Quarter

    Interest rate (pa)

    Jul–Sep 2016

    2.01%

    Oct–Dec 2016

    1.76%

    Jan–Mar 2017

    1.76%

    Apr–Jun 2017

    1.78%

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

    For 2016–17, interest for a quarter is calculated as follows:


    2016-17-quarterly-interest-formula

    Keep a record of the amount of early payment interest payable. 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 2017, 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 2015–16)
    • 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 2016–17) 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 either:

    • the date shown on the receipt
    • the date the payment is mailed to us plus three business days.

    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 2017.

    For information on interest rates after that date and on calculating the interest to be applied on tax that counts towards the no-TFN tax offset, and for a calculator to help you work out the amount of interest, see Individuals Superannuation.

    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 2015–16 tax return. An additional 34% tax amounting to $3,400 was paid on these contributions. The fund’s due date for lodgment of its 2015–16 tax return and payment of tax was 31 March 2017. The fund was slightly overdue lodging its return and in paying its tax. It paid the full amount of tax owing including the additional $3,400 tax on the no-TFN-quoted contributions on 7 April 2017.

    During 2016–17, 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 2015.

    Caron Superannuation Fund prepares its 2016–17 tax return in March 2018 and anticipates that the return will be lodged on 31 March 2018.

    At E2 on the fund’s 2016–17 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 2015–16 tax return and on which the fund paid the additional $3,400 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 2017 (the day on which the fund paid the tax) until 31 March 2018 (the day on which the fund lodges its 2016–17 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 2017

    $1,000 × (85 ÷ 365) × (1.78 ÷ 100)

    $ 4.145

    Jul–Sep 2017

    $1,000 × (92 ÷ 365) × (*1.78 ÷ 100)

    $ 4.487

    Oct–Dec 2017

    $1,000 × (92 ÷ 365) × (*1.78 ÷ 100)

    $ 4.487

    Jan–Mar 2018

    $1,000 × (90 ÷ 365) × (*1.78 ÷ 100)

    $ 4.389

    Total interest

    rounded to the nearest cent

    $17.51

    ^ The total for each quarter is rounded to three decimal places.

    *The base interest rate applied for each of the quarters above was not available at the time of publishing. Consequently, the rate for the period Apr–Jun 2017, 1.78%, is used for the purpose of this example.

    The fund is entitled to claim credit for $17.51 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 you 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 2016–17, 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 quarterly 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 2016–17. 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.
    Last modified: 07 Jul 2017QC 51234