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General information for funds

Find information to support your lodgment, record keeping, assessments, objections and private rulings for funds.

Published 29 May 2024

A trustee must elect for the fund to become ‘regulated’ under the SISA if the fund wishes to receive concessional tax treatment. The trustees of a new fund must give the Commissioner of Taxation a notice of an election to be a regulated superannuation fund. This must be provided within 60 days after establishment of the fund.

The trustee completes an application for ABN registration for superannuation entities. You can register at abr.gov.auExternal Link or you can phone 13 10 20 and ask for a paper copy of the application.

Once a trustee has elected for the fund to become regulated, they can't reverse the decision; the fund would have to be wound up to cease to be regulated under the SISA and the Superannuation Industry (Supervision) Regulations 1994External Link (SISR).

Switching regulators or changing trustees

Don't use either the Fund income tax return 2024 or the Self-managed superannuation fund annual return 2024 to report a switch of regulator or changes of trustees. If a non-regulated or Australian Prudential Regulation Authority (APRA) regulated superannuation fund attempts to lodge a Self-managed superannuation fund annual return 2024 it will be rejected. The same will occur if an SMSF attempts to lodge a Fund income tax return 2024.

Taxation of financial arrangements (TOFA)

The key provisions of the TOFA rules are found in Division 230 of the ITAA 1997, which generally provides for:

  • methods of taking into account gains and losses from financial arrangements, being accruals, realisation, fair value, foreign exchange retranslation, hedging, reliance on financial reports and balancing adjustment
  • the time at which the gains and losses from financial arrangements will be brought to account.

Which funds are affected?

The TOFA rules apply to a fund where the value of the fund's assets is $100 million or more. For the purposes of this test, the value of the fund's assets is worked out at the end of the immediately preceding income year (being the fund's income year ending 30 June 2010 or a later income year). If the fund came into existence during the current income year, the value of the fund's assets is worked out at the end of this income year.

Once the TOFA rules apply to a fund, they will continue to apply to that fund, even if its value of assets later falls below $100 million.

A fund that does not meet these requirements can elect to have the TOFA rules apply to it.

Which financial arrangements will the TOFA rules apply to?

The TOFA rules apply to all financial arrangements that the affected fund starts to have during income years commencing on or after 1 July 2010. In addition, a fund may have elected to have the TOFA rules apply to its financial arrangements for income years commencing on or after 1 July 2009.

A fund may have also separately made a transitional election to apply the TOFA rules to their existing financial arrangements.

For more information, see the Guide to the taxation of financial arrangements (TOFA).

Foreign exchange gains and losses

Under the Foreign exchange gains and losses (forex gains and losses) measures (Division 775 of the ITAA 1997) and the general translation and functional currency rules (Subdivisions 960-C and 960-D of the ITAA 1997), forex gains and losses are generally brought to account as assessable income or allowable deductions, when realised.

The forex measures cover both foreign currency denominated arrangements and, broadly, arrangements to be cash-settled in Australian currency with reference to a currency exchange rate. Forex gains and losses of a private or domestic nature, or in relation to exempt income or non-assessable non-exempt income, are not brought to account under the forex measures.

If a forex gain or loss is brought to account under the forex provisions and under another provision of the tax law (apart from the TOFA rules), it is assessable or deductible only under the forex measures.

Generally, where the TOFA rules apply to the forex gains and losses of a fund, then those gains and losses will be brought to account under the TOFA rules instead of the forex measures.

Additionally, forex gains and losses will generally not be assessable or deductible under the forex measures if they arise from certain acquisitions or disposals of capital assets, including CGT assets and depreciating assets, and the time between the acquisition or disposal and the due date for payment is no more than 12 months. Instead, any forex gain or loss is usually matched with or integrated into the tax treatment of the underlying asset.

The general translation rule requires all tax relevant amounts to be expressed in Australian currency regardless of whether there is an actual conversion of that foreign currency into Australian dollars.

The tax consequences of forex gains or losses on foreign currency assets, rights and obligations that were acquired or assumed before 1 July 2003 are determined under the law as it was before these measures came into effect, unless either:

  • the fund has made a transitional election that brings these gains and losses within the forex measures
  • there is an extension of an existing loan (for example, an extension by new contract or a variation to an existing contract) that brings the arrangement within these measures.

General value shifting regime

The general value shifting regime (GVSR) (Divisions 723 to 727 of the ITAA 1997) can apply to value shifts that happen from 1 July 2002.

Broadly, value shifting describes transactions and other arrangements that reduce the value of an asset and (usually) increase the value of another asset.

The GVSR consists of direct value shifting (DVS) and indirect value shifting (IVS) rules that primarily affect equity and loan interests in companies and trusts. There is also a DVS rule dealing with non-depreciating assets over which a right has been created. There are different consequences for particular interests according to whether the interest is held on capital account, as a revenue asset, or as trading stock.

Where the rules apply to a value shift, there may be a deemed gain (but not a loss) adjustment to adjustable values (such as cost bases) or adjustments to losses or gains on the realisation of assets.

There are ‘de minimis’ exceptions and exclusions which will minimise the cost of complying with the GVSR, particularly for small businesses. Entities dealing at arm’s length or on market value terms are generally excluded from the GVSR.

For more information, see Guide to the general value shifting regime.

Debt and equity rules

The debt and equity rules (Division 974 of the ITAA 1997) broadly operate to characterise certain interests as either debt or equity. For some tax law purposes, equity interests that are not shares are treated in the same way as shares, even though they are not shares in legal form. These interests are called ‘non-share equity interests’. They include some income securities and some stapled securities.

For an overview of the debt and equity rules and an explanation of what constitutes a non-share equity interest, see Guide to the debt and equity tests.

For the purposes of the imputation system, generally non-share equity interests are treated in the same way as shares that are not debt interests. Non-share dividends on these types of interests may be franked or unfranked. Show any amount of non-share dividend, whether franked or unfranked, or any amount of franking credit attached to the non-share dividend at the appropriate place in the tax return as if it were for a share.

Trans-Tasman imputation

The Trans-Tasman imputation provisions (Division 220 of the ITAA 1997) allow New Zealand resident companies to choose to enter the Australian imputation system. Doing so allows a company to maintain an Australian franking account and to attach Australian franking credits to dividends it pays one month after the company makes an election. Australian shareholders of these companies may benefit from the Australian franking credits attached to distributions the companies make (such a company is referred to as a New Zealand franking company).

If the fund is an Australian shareholder of a New Zealand franking company and received franked dividends with Australian franking credits attached directly or indirectly from a New Zealand franking company, see the following instructions for help in completing the tax return, item 10 Income – labels:

Foreign resident withholding

Subdivision 12-FB of Schedule 1 to the Tax administration Act 1953 (TAA) contains a withholding event for payments made to foreign residents. Only payments prescribed in the Taxation Administration Regulations 2017 (and former Taxation Administration Regulations 1976) are subject to this withholding measure. Withholding applies to certain payments made to foreign residents for operating or promoting gaming junkets in one or more casinos, entertainment or sports activities, the construction, installation and upgrading of buildings, plant and fixtures and activities associated with such construction.

Payers are required to withhold at the relevant rate prescribed in the appropriate regulation. We may grant a variation to the rate of withholding in special circumstances.

  • Foreign resident withholding does not affect other pay as you go (PAYG) and non-resident withholding obligations on interest, dividend and royalty payments.
  • This withholding is not a final tax. These withholding requirements will not affect existing income tax obligations for foreign residents deriving assessable income in Australia, such as the requirement to lodge a tax return. Any amounts withheld may be available as a credit against the income tax assessed.

Gross income subject to foreign resident withholding will not be taken into account in determining the fund’s instalment income.

Foreign currency translation rules

If the fund has entered into transactions in a foreign currency or derived income in a foreign currency, those amounts will need to be translated to Australian currency to calculate the amount assessable or deductible. The foreign currency translation rules are contained in Subdivision 960-C of the ITAA 1997 (and the functional currency rules are contained in Subdivision 960-D of the ITAA 1997).

More information available on General information on average rates.

Self-determination of foreign income tax offset

If a superannuation fund has paid foreign tax and wants to claim a foreign income tax offset, calculate the amount of any such offset allowed and show it at item 12 – label C1 Foreign income tax offset in Section D: Income tax calculation statement.

For more information on the calculation of foreign income tax offset, see the Guide to foreign income tax offset rules 2024.

Treatment of crypto assets

If you are involved in acquiring or disposing of crypto assets, you need to be aware of the tax consequences. These vary depending on the nature of your circumstances.

For information on any of the activities below, see Crypto asset investments and Crypto assets and business.

Continue to: Appendixes for the fund tax return

Return to: Instructions to complete the fund income tax return 2024

 

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