Did the SMSF incur other expenses?
No |
Leave L1 and L2 blank. Go to M1. |
Yes |
Read on. |
Write at L1 and L2, as required, the amount of expenses incurred by the SMSF in 2017–18 that do not fall into any other category in Section C. You will need to refer to:
- Table 7: 'Other amounts' categories and codes (next page) which specifically identifies, and provides codes for, nine categories of other amounts, and
- the description of each category below Table 7.
Do not include at L1 or L2:
- expenses that are more appropriately included elsewhere in Section C
- super benefits paid (do not include these anywhere in Section C).
Deductible other amounts
Write at L1 the total of any other deductible expenses that are not included at any other question.
Do not include at L1 expenses (or any part of expenses) that relate to earning:
- foreign income (see Expenses that relate to foreign income)
- non-arm's-length income (see Expenses that relate to non-arm's-length income).
If the SMSF pays retirement phase superannuation income stream benefits to a member, refer to How are expenses treated when an SMSF has ECPI? before you claim a deduction for the expenses that you include at L1.
Non-deductible other amounts
Write at L2 the total of any other expenses that the SMSF incurred that are not deductible and that are not included at any other question. For example, include income tax paid by the SMSF at L2 as it is not deductible at all.
Also include an amount for any other expenses (that are not included at any other question) to the extent those expenses are incurred for the purposes of earning exempt income, such as exempt current pension income.
Code boxes
You must print a code letter in the code box to the right of:
- L1 if you write an amount at L1
- L2 if you write an amount at L2.
Print the code letter from table 7 that best describes the largest amount you include at each of L1 and L2.
Code letter |
Amounts in respect of |
|---|---|
A |
|
B |
|
C |
|
E |
|
F |
|
I |
Deduction relating to listed investment company (LIC) capital gain amount |
N |
Deduction relating to foreign non-assessable non-exempt income |
R |
|
T |
|
O |
Balancing adjustment amounts (A)
If the SMSF ceases to hold or to use a depreciating asset, you need to work out a balancing adjustment amount. Include balancing adjustment losses at L1 or L2.
For more information, see Guide to depreciating assets 2018.
Contribution that is a fringe benefit (B)
A 'contribution that is a fringe benefit' is a contribution that is:
- included in the SMSF's assessable income as an assessable contribution that is a fringe benefit, and
- taxed as a fringe benefit in the hands of the contributor.
The SMSF can deduct a contribution that is a fringe benefit in the income year in which the contribution is included in assessable income. The deduction is included at L1.
A contribution made for an employee to a complying SMSF is not a fringe benefit.
Legislation
Section 295-490 of the ITAA 1997
Exclusion of personal contributions (C)
'Exclusion of personal contributions' refers to situations where an SMSF:
- received (from a member) during 2017–18 a valid variation of the Notice of intent to claim a deduction for personal super contributions that reduced the amount of personal contributions that were assessable income of the SMSF in a previous income year, and
- did not choose to amend the SMSF annual return for that earlier income year in which it included the contributions as assessable income.
In this situation the SMSF may claim a deduction by including an amount at L1 for 'exclusion of personal contributions'. The SMSF's assessable income for 2017-18 is reduced by the amount its assessable income in a previous income year is overstated, following a valid variation notice being received from the member.
Do not include an amount at L1 for 'exclusion of personal contributions' if a member varies a Notice of intent to claim a deduction for personal super contributions for personal super contributions made by the member in 2017–18 (include the reduced amount at R2 Assessable personal contributions).
For more information, see Notice of intent to claim or vary a deduction for personal super contributions.
Environmental protection activities (EPA) expenditure (E)
A deduction is allowed for certain capital expenditure incurred for the sole or dominant purpose of:
- preventing, fighting or remedying pollution of the environment resulting from an earning activity, or the site of an earning activity, or
- treating, cleaning up, removing or storing waste resulting from an earning activity, or the site of an earning activity.
Include at L1 a deduction for EPA expenditure.
Expenditure that forms part of the cost of a depreciating asset is not deductible as expenditure on EPA if a deduction is available for the decline in value of the asset.
You can write off expenditure incurred on or after 19 August 1992 on certain earthworks constructed as a result of carrying out EPA at the rate of 2.5% per annum under the provisions for capital works expenditure.
For more information, see:
- Guide to depreciating assets 2018
- Section 40-755 of the ITAA 1997.
Forex losses (F)
If the SMSF has any deductible or non-deductible foreign exchange losses of a revenue nature that have not been shown at any other question in Section C, include the amount of the losses at L1 or L2.
See Foreign exchange (forex) to work out the SMSF's forex losses, if any.
Deduction relating to listed investment company (LIC) capital gain amount (I)
A listed investment company (LIC) can pay a dividend to an SMSF that includes a LIC capital gain amount (shown in the LIC’s dividend statement). A complying SMSF can claim a deduction of one-third of that LIC capital gain amount. An Australian resident non-complying SMSF that is a trust can claim a deduction of one-half of that LIC capital gain amount.
Include at L1 allowable deductions for a LIC capital gain amount.
For more information, see Subdivision 115-D of the Income Tax Assessment Act 1997External Link.
Deduction relating to foreign non-assessable non-exempt income (N)
Certain expenses relating to foreign non-assessable non-exempt income (that is, tax-free income) are allowable deductions against the SMSF’s assessable income if the expenses incurred are a cost in relation to certain debt interests.
Include at L1 a deduction for such expenses.
For SMSFs, the relevant non-assessable non-exempt income is foreign income covered by sections 23AI or 23AK of the ITAA 1936.
For more information, see:
- Section 25-90 of the ITAA 1997
- Sections 23AI or 23AK of the ITAA 1936 if the amount is attributed income.
Return of contributions by non-complying SMSF (R)
An SMSF that has been non-complying since 1 July 1988, or since it was established if this is later, can deduct at L1 an amount which it pays to an entity (the receiving entity), so far as:
- the amount reasonably represents the direct or indirect return of
- a contribution for which the receiving entity or another entity has deducted or can deduct an amount, or
- earnings on such a contribution, and
- the receiving entity includes the amount in its assessable income under section 290-100 of the ITAA 1997.
The amount can be deducted by the SMSF in the income year in which it is included in the receiving entity's assessable income.
For more information, see section 295-490 of the ITAA 1997.
Taxation of financial arrangements (TOFA) amounts (T)
If the TOFA rules apply to calculate an assessable gain or deductible loss on the SMSF’s financial arrangements, include at L1 any deductible losses relating to financial arrangements. Show at L2 any TOFA losses for which a deduction could not be claimed. TOFA amounts that have been included elsewhere should not be included here.
Complete Section I: Taxation of financial arrangements if what you write at L1 or L2 includes an amount determined under the TOFA rules.
Other amounts not listed above (O)
If the amount that you include at L1 or L2 is not one of the types of deduction listed above for codes A, B, C, E, F, I, N, R or T, then use code O for 'other'.