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  • D1, D Foreign income questions

    Did the SMSF have foreign income or losses in 2018–19?

    No

    Leave D and D1 blank. Go to E.

    Yes

    Read on.

    The foreign income questions are:

    An Australian super fund is taxed on its worldwide income and must declare all income it earned from foreign sources.

    Foreign income of the SMSF may be taxed in the foreign country. If the SMSF has paid foreign income tax it may be entitled to an Australian foreign income tax offset.

    For more information, see Foreign income.

    D1 Gross foreign income

    Write at D1 the SMSF's gross assessable income from foreign sources in 2018–19. The amount at D1 should not be reduced by any loss or outgoing related to the income.

    The SMSF's gross assessable foreign income includes income from foreign sources and any foreign tax paid on that income and without reducing it for any expenses related to that income. If the SMSF is unable to report the gross (pre-tax) amount of foreign source income on its share of net income from a trust, it can include the net (after-tax) amount at D1 instead.

    Include at D1:

    • dividends, supplementary dividends and other dividends from foreign companies (including New Zealand franking companies that provide Australian franking credits)
    • interest from foreign sources
    • foreign source income included in a share of net income from a trust (do not include this at M Gross trust distributions)
    • foreign source income included in a distribution from a partnership (do not include this at I Gross distributions from partnerships)
    • attributable income through the controlled foreign company (CFC) regime.

    Do not include:

    • losses or deductible expenses from a foreign source (include these at D Net foreign income)
    • Australian franking credits attached to New Zealand dividends (include these at E Australian franking credits from a New Zealand company)
    • foreign exchange gains and losses from both foreign and domestic sources (write gains at S Other income and losses at L1 or L2 Other amounts in section C)
    • foreign source capital gains and losses (net capital gains should be included at A Net capital gain)
    • foreign income that is non-arm's length income of a complying SMSF (include this at Non-arm's length income items U1, U2, or U3).

    D Net foreign income

    You must complete D if you write a value at D1.

    Write at D the SMSF's net income from foreign sources in 2018–19.

    To calculate the SMSF's net foreign income, take the amount at D1 Gross foreign income and subtract:

    • foreign source losses incurred in 2018–19 (but not CGT losses), and
    • deductible expenses to the extent to which they relate to foreign income.

    If the total amount at D is negative, print L in the Loss box to the right of the amount.

    If you include an amount at D that is exempt current pension income, include it also at Y Exempt current pension income.

    Do not subtract debt deductions in calculating net foreign income at D, except where they are attributable to an overseas permanent establishment of the SMSF. Include the debt deductions at the relevant question in section C.

    Example: Foreign income

    In 2018–19, SMSF D held shares that were listed on a foreign stock exchange. The SMSF received $20,000 dividends, $5,000 foreign franking credits and has deductible expenses of $200 that relate solely to the dividends.

    SMSF D reports:

    D1 Gross foreign income $20,000

    D Net foreign income $19,800

    It does not include the foreign franking credits anywhere on the SMSF annual return.

    End of example
    Last modified: 03 Oct 2019QC 58668