• Example 2 – One partial rollover during the year

    Example 2 assumes there are no investment earnings, losses or administration fees. In some cases, rounding has been applied to eliminate cents and simplify the calculations.

    Julie is a member and a trustee of an SMSF. Her account balance on 1 July 2015 is $50,000. Included in this balance are Julie's personal contributions of $10,000. She has not given a notice of intention to deduct any of these contributions using a Notice of intent to claim or vary a deduction for personal super contributions form (NAT 71121), so they are a tax-free component for income tax purposes.

    In March 2016, Julie makes a non-deductible personal contribution of $100,000. This brings the value of her super interest to $150,000, with a tax-free component of $110,000.

    In June 2016, Julie rolls over $60,000 to Fund XYZ and leaves $90,000 in her SMSF. When the rollover is made, Julie's SMSF provides Fund XYZ with an RBS reporting income tax and contributions information as follows.

    Completing the RBS when the rollover is made

    Item 13 – Tax components

    Using the proportioning rule, Julie calculates the tax-free component of her $60,000 rollover as the ‘Rollover amount’ multiplied by the result of the ‘Tax-free component of her super interest before the rollover’ divided by the ‘Value of her super interest before the rollover’, that is:

    $60,000 × ($110,000 ÷ $150,000) = $44,000

    The taxable component of her $60,000 rollover is the remainder of the rollover:

    $60,000 − $44,000 = $16,000

    Julie completes item 13 'Tax components' as follows:

    Tax-free component

    $44,000

    Taxable component:

    • Element taxed in the fund

    $16,000

    • Element untaxed in the fund

     

    Julie also needs to calculate how much of her personal contributions made in the 2015–16 financial year remain in the SMSF after paying the rollover to Fund XYZ and how much was rolled out and so reported on the RBS given to Fund XYZ.

    While Julie can calculate the components of her remaining super interest in the SMSF using the same method as above, it is simpler to use subtraction, as follows.

    The tax-free component of her interest left in the SMSF is the tax-free component before the rollover minus the tax-free component rolled out:

    $110,000 − $44,000 = $66,000

    The taxable component is the remainder of her interest – that is, the total in the SMSF after the rollover minus the tax-free component after the rollover:

    $90,000 − $66,000 = $24,000

    So, the portion of the $100,000 contribution that is still held for Julie in the SMSF after paying the rollover is the ' Tax-free component of the remaining interest' multiplied by the result of the ' Contribution made in the same financial year as the rollover' divided by the ' Tax-free component of her entire interest before the rollover', that is:

    $66,000 × ($100,000 ÷ $110,000) = $60,000

    Completing the SMSF annual return after the end of the financial year

    Prior to completing section F of the SAR, Julie must ensure that she has all the details relating to the contributions that have been made to her SMSF during the financial year, together with the details of any contributions that she has rolled out of her SMSF to other funds on a RBS.

    Julie must report on the SAR details of the contributions made in the 2015–16 financial year and rollovers. In section F of the SAR at label B 'Personal contributions', Julie reports $100,000 -

    At the same time, Julie will need to include at section F label Q 'Outward rollovers and transfers' of $60,000.

    Section F will include the following amounts

    Opening account balance

    $50,000

    Label A – Employer contributions

    Nil

    Label B – Personal contributions

    $100,000

    Label N – Total contributions

    $100,000

    Label O – Allocated earnings or losses

    Nil

    Label P – Inward rollover amounts

    Nil

    Label Q – Outward rollovers and transfers

    $60,000

    Label R – Benefit payments and code

    Nil

    Label S – Closing account balance

    $90,000

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      Last modified: 14 Feb 2017QC 25212