B Gross tax

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

Use examples 5 and 6 to help you calculate the gross tax amount.

Example 5: Income tax calculation: Superannuation fund showing income at R3 No-TFN quoted contributions item 10

Example 5a: 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:

		Amount	Rate	Tax
Assessable income
	No-TFN quoted contributions (amount from R3 item 10, tax amount shown at J item 12)	$2,000	31.5%	$630
	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
	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)			$1,980#

# 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.

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

Example 5b: 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 46.5% 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:

		Amount	Rate	Tax
Assessable income
	No-TFN quoted contributions (amount from R3 item 10,tax amount shown at J item 12)	$2,000	1.5%	$30
	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
	Administration expenses (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)			$4,080#

# 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.

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

Example 5c: 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.

		Amount	Rate	Tax
Assessable income
	No-TFN quoted contributions (amount from R3 item 10, tax amount shown at J item 12)	$2,000	31.5%	$630
	Assessable contributions (from R item 10)	$2,000
	Total assessable income (from V item 10)	$2,000
less
Deductions
	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)			$630#

# Gross tax of $630 is payable even though the fund made a loss for the income year.

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

Example 6: Superannuation fund showing income at U Net non-arm’s length income item 10

Example 6a: 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 private company dividends. 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, $2,000 is treated as non-arm’s length income. The net non-arm’s length income is taxed at 45%.

Non-arm’s length income expenses are $100. These expenses can be deducted only 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).

		Amount	Rate	Tax
Assessable income
	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
	Administration expenses (from Q item 11)	$2,500
	Taxable income (from A item 12)	$11,400
Components of taxable income
	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 there are not any no-TFN quoted contributions.

Example 6b: Non-complying superannuation fund

If the Elizabeth Superannuation Fund is a non-complying fund, its income is taxed at a rate of 45% (although a tax rate of 46.5% would apply to no-TFN quoted contributions if it had any).

You calculate its gross tax as follows:

		Amount	Rate	Tax
Assessable income
	Assessable contributions (from R item 10) plus	$10,000
	Net private company dividends (including those treated as non-arm’s length income) (from J and U item 10)	$3,900
	Total assessable income (from V item 10)	$13,900
less
Deductions
	Administration expenses (from Q item 11)	$2,500
	Taxable income (from A item 12)	$11,400	45%	$5,130
	Tax on taxable income (shown at T1 item 12)			$5,130