Section B: Income – item 11

Do you need to complete section B?

Most SMSFs need to complete section B. However, you don't complete section B if all the SMSF's income in 2023–24 is exempt from income tax under the exempt current pension income rules.

Don't assume that the SMSF has no assessable income (and that you don't need to complete section B) just because all its members received retirement phase superannuation income stream benefits in 2023–24. Situations where an SMSF has assessable income even though it pays retirement phase superannuation income stream benefits to all its members include:

• the SMSF is non-complying
• the SMSF has non-arm's length income
• the SMSF received assessable contributions
• the SMSF paid less than the minimum annual pension payment amount to one or more members receiving retirement phase superannuation income stream benefits (see Income stream (pension))
• the SMSF is not paying retirement phase superannuation income stream benefits to all members for the entire income year
• the SMSF is paying superannuation income stream benefits from an income stream that is not in retirement phase, for example, a transition to retirement income stream paid to a member who is under 65 and has not notified the SMSF they have met a condition of release with a nil cashing restriction
• the value of the SMSF's assets exceeds the total of the account balances supporting the income streams (for example, an SMSF may keep assets in a reserve account, separate from the members’ accounts, to be prepared for certain contingencies).

Whether or not you need to complete section B, remember to complete Section C: Deductions and non-deductible expenses where you include expenses that relate to the SMSF's tax-exempt income. Expenses, that are normally deductible, are generally non-deductible when they relate to tax-exempt income.

Answering Section B

Complete section B for all assessable income the SMSF earned during 2023–24, whether the SMSF received it or not.

Work through each question in this section and:

• write the relevant amount if the question applies to your SMSF
• write zero (0) at the mandatory question item 11 – label R3 No-TFN-quoted contributions if it doesn't apply to your SMSF
• leave the answer box blank for other questions that don't apply to your SMSF.

Answer the questions in their sequence.

• Some questions rely on information you have already entered in previous questions.
• You will need to go through the questions in the left-hand column (labels D1, R1 to R6, U1 to U3) before you can complete labels D, R, U in the right-hand column.

Don't show cents for any amount you write in this section.

Goods and services tax (GST)

If the SMSF is registered, or required to be registered, for GST purposes, don't include GST amounts in the assessable income you show on the annual return. In the deductions you show, don't include any amount that relates to input tax credit entitlements.

If the SMSF is not registered and not required to be registered for GST purposes, or if it is not entitled to an input tax credit, the deductions you show are the GST-inclusive amounts that the SMSF incurred. Special rules apply to GST adjustments. To register for GST, apply at the Australian Business RegisterExternal Link.

Foreign currency translation rules

If the SMSF has entered into transactions in a foreign currency or derived income in a foreign currency, you need to translate those amounts to Australian currency to calculate the assessable or deductible amount.

For more information, see:

• Translation (conversion) rules
• General information on average rates.

Taxation financial arrangements (TOFA)

If the TOFA rules apply to the SMSF, include assessable income from financial arrangements subject to the TOFA rules at the appropriate item. Complete Section I Taxation of financial arrangements if you include an amount determined under the TOFA rules.

For more information, see Section I: Taxation of financial arrangements.

Family trust distribution tax (FTDT) and Trustee beneficiary non-disclosure tax (TBNT)

Don't include at any question in Section B any part of a distribution:

• received from a trust or partnership on which family trust distribution tax (FTDT) has been paid (don't show this anywhere in the annual return), or
• received (directly or indirectly) from a closely held trust on which trustee beneficiary non-disclosure tax (TBNT) has been paid (don't show this anywhere in the annual return).

Losses and outgoings that the SMSF incurred in deriving an amount that is excluded from assessable income because FTDT or TBNT has been paid are not deductible (report them as non-deductible expenses).

The SMSF can't claim a franking credits tax offset for any franking credits attributable to the whole or a part of a dividend that is excluded from assessable income because FTDT or TBNT has been paid.

Non-arm's length income

The factors that you need to consider when deciding whether a transaction is at arm's length or non-arm's length depend on whether the income is:

• private company dividends
• distribution from a trust
• another type of income.

These factors are discussed in the following sections.

Complying SMSFs don't include non-arm's length income at Section B, labels A to T. Instead they include it at labels:

• U1 Net non-arm's length private company dividends
• U2 Net non-arm's length trust distributions
• U3 Net other non-arm's length income.

For example, non-arm's length unfranked dividends are included at label U1 Net non-arm's length private company dividends instead of at label J Unfranked dividend amount.

However, don't include at labels U1, U2 or U3 the amount of non-arm's length income calculated using the 'Twice the difference approach' that arises from a non-arm's length general expense.

Non-complying SMSFs don't need to separate their non-arm's length income from their arm's length income. They include both arm's length and non-arm's length income at labels A to T.

Private company dividends that are non-arm's length income

A dividend paid by a private company, or ordinary income or statutory income reasonably attributable to such a dividend, is non-arm's length income unless the amount is consistent with an arm’s length dealing.

To decide whether the amount is consistent with an arm’s length dealing, have regard to:

• the value of the shares held by the SMSF in the company
• the cost to the SMSF of the shares on which the dividends were paid
• the dividend rate on those shares
• whether dividends have been paid on other shares in the company (and at what rate)
• whether the company has issued shares in lieu of dividends to the SMSF and the circumstances of the issue
• any other relevant matters.

Consider any connection between the private company and the SMSF.

If the SMSF received non-arm's length private company dividends, include it at:

• label U1 Net non-arm's length private company dividends if the SMSF is complying
• the appropriate labels A to T (as if it were arm's length income) if the SMSF is non-complying.

For more information about determining whether income is non-arm's length income, see:

• Non-arm's length income
• Taxation Ruling TR 2006/7 Income tax: special income derived by a complying superannuation fund, a complying approved deposit fund or a pooled superannuation trust in relation to the year of income
• Section 295-550 of the Income Tax Assessment Act 1997.

Trust distributions that are non-arm's length income

A distribution from a trust is non-arm's length income of a complying SMSF if:

• the SMSF, as beneficiary of a trust, does not have a fixed entitlement to income from the trust (generally discretionary trusts) – see, subsection 295-550(4) of the ITAA 1997, or
• all of the following apply:
  • the SMSF, as beneficiary of the trust, has a fixed entitlement to the income from the trust (generally unit trusts)
  • as a result of a scheme, the parties were not dealing with each other at arm's length, and
  • either or both of the following apply – see, subsection 295-550(5) of the ITAA 1997)    
    • the amount of income is greater than what might have been expected had the parties been dealing with each other at arm’s length in relation to the scheme
    • the loss, outgoing or expenditure (either revenue or capital in nature) incurred in acquiring the entitlement, or in gaining or producing that income, is less than (including a nil amount) what might have been expected had the parties been dealing with each other at arm's length in relation to the scheme.

If the SMSF received non-arm's length trust distributions, include it at:

• label U2 Net non-arm's length trust distributions if the SMSF is complying
• label M Gross trust distributions (as if it were arm's length income) if the SMSF is non-complying.

If you report a trust distribution that is non-arm's length at item 11 – label U2 or item 11 – label M, complete a Trust income schedule 2024 and attach it to the SMSF annual return.

For more information, see:

• Non-arm's length income
• Taxation Ruling TR 2006/7 Income tax: special income derived by a complying superannuation fund, a complying approved deposit fund or a pooled superannuation trust in relation to the year of income
• Law Companion Ruling LCR 2021/2 Non-arm's length income – expenditure incurred under a non-arm's length arrangement
• Section 295-550 of the Income Tax Assessment Act 1997.

Identifying other types of income that are non-arm's length

Other types of income (that is, income that is not a private company dividend or distribution from a trust) are non-arm's length income if as a result of a scheme the parties were not dealing with each other at arm's length and either or both of the following applies:

• the amount of income is greater than what might have been expected had the parties been dealing with each other at arm’s length in relation to the scheme
• from 1 July 2018, the amount of loss, outgoing or expenditure (either revenue or capital in nature) incurred in gaining or producing the income is less than (including a nil amount) what might have been expected had the parties been dealing with each other at arm's length in relation to the scheme.

Whether income is non-arm's length income depends on all of the circumstances of the relationship including the return on the investment and the commercial risks undertaken by the SMSF. Other non-arm's length income may include, for example:

• interest on loans
• rent from property
• profit on the sale of assets
• net capital gains.

If the SMSF received non-arm's length income that is not a private company dividend or a trust distribution, include it at:

• label U3 Net other non-arm's length income if the SMSF is complying
• the appropriate label A to T (as if it were arm's length income) if the SMSF is non-complying.

Don't include at labels U1, U2, U3, U or any other label in Section B any non-arm’s length income as a result of non-arm’s length general expenses. These non-arm's length general expenses result in non-arm’s length income calculated using the ‘Twice the difference approach’ and will be taken into account when calculating label T1 Tax on taxable income in Section D.

For more information, see:

• Non-arm's length income
• Taxation Ruling TR 2006/7 Income tax: special income derived by a complying superannuation fund, a complying approved deposit fund or a pooled superannuation trust in relation to the year of income
• Law Companion Ruling LCR 2021/2 Non-arm's length income – expenditure incurred under a non-arm's length arrangement
• Section 295-550 of the Income Tax Assessment Act 1997.

Tax treatment of crypto assets

• If you acquired crypto assets as an investment or disposed of it in 2023–24, you may have to pay capital gains tax on the disposal. For more information, see Transactions – acquiring and disposing of crypto assets.
• If you acquired or disposed of crypto assets in the ordinary course of your business in 2023–24, the funds or property you receive through the acquisition and disposal are likely to be ordinary assessable income. For more information, see Crypto assets used in business.

11 Income

In this section, complete labels:

• G, M and A Capital gains tax questions
• G Did you have a capital gains tax (CGT) event during the year?
• M Have you applied a CGT exemption or rollover?
• A Net capital gain
• B Gross rent and other leasing and hiring income
• C Gross interest
• X Forestry managed investment scheme income
• D1, D Foreign income questions
• D1 Gross foreign income
• D Net foreign income
• E Australian franking credits from a New Zealand company
• F Transfers from foreign funds
• H Gross payments where ABN not quoted
• I Gross distribution from partnerships
• J, K, L Dividends and franking credits
• J Unfranked dividend amount
• K Franked dividend amount
• L Dividend franking credit
• M Gross trust distributions
• R1, R2, R3, R6, R Assessable contributions
• R1 Assessable employer contributions
• R2 Assessable personal contributions
• R3 No-TFN-quoted contributions
• R6 Transfer of liability to life insurance company or PST
• R Assessable contributions
• S Other income
• T Assessable income due to changed tax status of fund
• U1, U2, U3 and U Non-arm's length income
• U1 Net non-arm’s length private company dividends
• U2 Net non-arm's length trust distributions
• U3 Net other non-arm's length income
• U Net non-arm's length income
• W Gross income
• Y Exempt current pension income
• V Total assessable income

G, M and A Capital gains tax questions

This section covers labels:

• G Did you have a capital gains tax (CGT) event during the year?
• M Have you applied a CGT exemption or rollover?
• A Net capital gain.

For most CGT events a capital gain or capital loss is the difference between what it cost the SMSF to acquire an asset and what the SMSF received when it disposed of the asset.

An SMSF's net capital gain forms part of its assessable income.

A capital gain or capital loss that a complying SMSF makes from a CGT event for a segregated current pension asset is disregarded.

If the SMSF makes a capital loss, the SMSF can't claim it against income but can use it to reduce a capital gain in the same income year. If total capital losses exceed total capital gains for the income year, the SMSF has a net capital loss. The SMSF can generally carry the net capital loss forward and deduct it against capital gains in future income years. Net capital losses are applied in the order in which they are made.

All SMSFs that have one or more CGT events during the income year must complete a Capital gains tax schedule 2024 and attach it to the annual return if:

• the total current year capital gains are greater than $10,000
• the total current year capital losses are greater than $10,000
• you have chosen to apply the transitional CGT relief in 2016–17 and a realisation event occurred in 2023–24. For more information, see Law Companion Ruling LCR 2016/8 Superannuation reform: transitional CGT relief for complying superannuation funds and pooled superannuation trusts.

If you have current year capital losses, you may also need to complete a Losses schedule 2024.

You can calculate the SMSF's net capital gain or loss using the:

• capital gain or capital loss worksheet 2024
• capital gains tax schedule 2024 (if required).

How to report a capital gain or loss in the SMSF annual return

For information about reporting a capital gain or loss in the SMSF annual return, see the instructions for the following:

• G Did you have a capital gains tax (CGT) event during the year? (Section B)
• A Net capital gain (Section B)
• Y Exempt current pension income (Section B)
• V Net capital losses carried forward to later income years (Section E).

For information about reporting a capital gain or loss from an asset where the fund is paying a retirement phase income stream, see How capital gains and capital losses are treated when an SMSF has ECPI.

Foreign source capital gains

An Australian super fund makes a capital gain or capital loss if a CGT event happens to any of its worldwide CGT assets.

An SMSF that is not an Australian super fund makes a capital gain or capital loss if a CGT event happens to a CGT asset that is a taxable Australian property.

For more information about CGT events, see CGT events.

G Did you have a capital gains tax (CGT) event during the year?

Print X in the appropriate box, either No or Yes at item 11 – label G.

Answer Yes if the SMSF:

• had a CGT event occur during the income year
• received a share of net income from a trust that includes a capital gain, or
• is a subsequent participant in a forestry managed investment scheme and had a CGT event as a result of a harvest or a sale of an interest in the forestry managed investment scheme (see Appendix 2: Forestry managed investment schemes).

M Have you applied a CGT exemption or rollover?

Did the SMSF have capital gains disregarded or deferred as a result of applying a CGT exemption or rollover?

• No – Print X in the No box.
• Yes – Print X in the Yes box. In the code box at label M, print the appropriate code from Table 2.

If the SMSF has applied more than one CGT exemption or rollover and you are using software that allows it, select all of the codes that apply.

If you are lodging on a paper return, print the code that corresponds to the CGT exemption or rollover that resulted in the largest amount of capital gain disregarded or deferred.

If more than one CGT exemption or roll-over applies to the largest amount of capital gain disregarded or deferred, choose the most specific rollover or exemption code that applies. For example, choose the ‘Scrip for scrip rollover (Subdivision 124-M)’ code before the more general rollover ‘Replacement asset rollovers (Division 124)’ code.

If you have chosen to apply the transitional CGT relief in 2016–17 and a realisation event occurred in 2023–24 you must report it in the Capital gains tax schedule 2024.

Table 2: CGT exemptions and roll-over codes

Code	Description
A	Small business active asset reduction (Subdivision 152-C)
B	Small business retirement exemption (Subdivision 152-D)
C	Small business roll-over (Subdivision 152-E)
D	Small business 15-year exemption (Subdivision 152-B)
E	Foreign resident CGT exemption (Division 855)
F	Scrip for scrip roll-over (Subdivision 124-M)
L	Replacement asset roll-over (Division 124)
M	Exchange of shares or units (Subdivision 124-E)
N	Exchange of rights or options (Subdivision 124-F)
O	Exchange of shares in one company for shares in another company (Division 615)
P	Exchange of units in a unit trust for shares in a company (Division 615)
Q	Disposal of assets by a trust to a company (Subdivision 124-N)
S	Same asset roll-over (Division 126)
U	Early stage investor (Subdivision 360-A)
V	Venture capital investment (Subdivision 118-F)
X	Other exemptions and rollovers

For more information about CGT exemptions and rollovers, see List of CGT assets and exemptions.

A Net capital gain

Did the SMSF have a net capital gain?

• No – Leave label A blank. Go to label B.
• Yes – Print at label A the SMSF's net capital gain.

The SMSF’s net capital gain is the total capital gain for 2023–24 less:

• any 2023–24 capital losses
• any prior year net capital losses
• any other relevant CGT discount or concession.

Show at label A the amount of net capital gain calculated or transferred from:

• label 6A at part 6 of the CGT summary worksheet
• label A at part 6 of the CGT schedule, if any.

When working out the SMSF's net capital gain, include:

• net foreign source capital gains
• the capital gains component of the SMSF's share of net income from a trust
• the capital gains component of the SMSF's share of a distribution from a partnership
• capital gains made by the SMSF from a forestry managed investment scheme (see Appendix 2: Forestry managed investment schemes)
• the amount of capital gain previously deferred under the Transitional CGT relief.

If you include an amount at label A that is exempt current pension income, include it also at item 11 – label Y Exempt current pension income.

If you report a distribution from a trust at item 11 – label A, complete a Trust income schedule 2024 and attach it to the SMSF annual return.

For more information, see Guide to capital gains tax 2024.

Non-arm's length capital gains

A net capital gain from the sale of a CGT asset by the SMSF is non-arm's length income if, for example, the asset was either:

• sold to a related party for more than the asset’s market value
• originally acquired from a related party for less than the asset’s market value.

Complying SMSFs don't include non-arm's length net capital gains at label A. Show these at Non-arm's length income item 11 – labels U2 or U3.

To calculate the SMSF’s net capital gain, see Calculating your CGT.

B Gross rent and other leasing and hiring income

Did the SMSF earn income from renting, leasing or hiring of land, buildings or other assets?

• No – Leave label B blank. Go to label C.
• Yes – Read on.

Write at label B the total income that the SMSF earned from renting, leasing and hiring of land, buildings and other assets. The amount at label B should not be reduced by any loss or outgoing related to the income.

If you include an amount at label B that is exempt current pension income, include it also at item 11 – label Y Exempt current pension income.

Don't include at label B rental, leasing or hiring income that is:

• derived from foreign sources (write it at item 11 – label D1 Gross foreign income)
• part of a distribution from a partnership (write it at item 11 – label I Gross distribution from partnerships)
• included in a share of net income from a trust (write it at item 11 – label M Gross trust distributions)
• non-arm's length income of a complying SMSF (write it at item 11 – label U3 Net other non-arm's length income).

C Gross interest

Did the SMSF earn interest income from an Australian source?

• No – Leave label C blank. Go to label X.
• Yes – Read on.

Write at label C the total interest income that the SMSF earned in 2023–24. The amount at label C should not be reduced by any loss or outgoing related to the income.

Include at label C:

• interest earned on money (for example)  
  • in a bank (or similar institution) account
  • that the SMSF has lent to another person or organisation
• interest that is paid by us or credited against another SMSF liability because the SMSF paid a tax liability early.

If you include an amount at label C that is exempt current pension income, include it also at item 11 – label Y Exempt current pension income.

Don't include interest income that is:

• derived from foreign sources (write it at item 11 – label D1 Gross foreign income)
• part of a distribution from a partnership (write it at item 11 – label I Gross distribution from partnerships)
• non-share dividends received from holding a non-share equity interest (write it at item 11 – labels J Unfranked dividend amount, K Franked dividend amount and L Dividend franking credit as applicable; for more information, see Guide to the debt and equity tests)
• included in a share of net income from a trust (write it at item 11 – label M Gross trust distributions)
• non-arm's length income of a complying SMSF (write it at item 11 – label U3 Net other non-arm's length income).

X Forestry managed investment scheme income

Did the SMSF earn income from a forestry managed investment scheme (FMIS)?

• No – Leave label X blank. Go to labels D1 and D.
• Yes – Read on.

Write at label X the SMSF's income from all FMISs. The amount at label X should not be reduced by any loss or outgoing related to the income.

You can read more about calculating FMIS income at Appendix 2: Forestry managed investment schemes.

If you include an amount at label X that is exempt current pension income, include it also at item 11 – label Y Exempt current pension income.

Don't include capital gains from an FMIS at label X; include these capital gains when working out the SMSF's net capital gain to show at item 11 – label A Net capital gain.

For more information on the CGT treatment of the SMSF’s forestry interests, see Capital gains tax.

If the SMSF is a member of a collapsed agribusiness managed investment scheme, see Collapse and restructure of agribusiness managed investment schemes – participant information.

D1, D Foreign income questions

Did the SMSF have foreign income or losses in 2023–24?

• No – Leave labels D and D1 blank. Go to label E.
• Yes – Read on.

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.

D1 Gross foreign income

Write at label D1 the SMSF's gross assessable income from foreign sources in 2023–24. The amount at label 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 label D1 instead.

Include at label 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 (don't include this at item 11 – label M Gross trust distributions)
• foreign source income included in a distribution from a partnership (don't include this at item 11 – label I Gross distributions from partnerships)
• attributable income through the controlled foreign company (CFC) regime.

Don't include:

• losses or deductible expenses from a foreign source (include these at item 11 – label D Net foreign income)
• Australian franking credits attached to New Zealand dividends (include these at item 11 – label E Australian franking credits from a New Zealand company)
• foreign exchange gains and losses from both foreign and domestic sources (write gains at item 11 – label S Other income and losses at Section C, item 12 – labels L1 or L2 Other amounts)
• foreign source capital gains and losses (net capital gains should be included at item 11 – label 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 item 11 – labels U1, U2, or U3).

If you report a distribution from a trust at item 11 – label D1, complete a Trust income schedule 2024 and attach it to the SMSF annual return.

D Net foreign income

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

Write at label D the SMSF's net income from foreign sources in 2023–24.

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

• foreign source losses incurred in 2023–24 (but not CGT losses), and
• deductible expenses to the extent to which they relate to foreign income.

If the total amount at label D is negative, print L in the Loss box.

If you include an amount at label D that is exempt current pension income, include it also at item 11 – label Y Exempt current pension income.

Don't subtract debt deductions in calculating net foreign income at label D, except where they are attributable to an overseas permanent establishment of the SMSF. Include the debt deductions at the relevant item in Section C.

E Australian franking credits from a New Zealand company

Dividends paid by New Zealand resident companies don't normally carry Australian franking credits. However, a New Zealand company can choose to join the Australian imputation system and distribute Australian franking credits with its dividends. The company may be referred to as a New Zealand franking company.

Did the SMSF receive Australian franking credits attached to a distribution from a New Zealand company?

• No – Leave label E blank. Go to label F.
• Yes – Read on.

Write at label E the total Australian franking credits, attached to assessable franked distributions from New Zealand companies, that the SMSF received in 2023–24. The amount at label E should not be reduced by any loss or outgoing related to the income.

The SMSF must have included the assessable franked distribution at item 11 –label D1 Gross foreign income. To work out whether the distribution is assessable in Australia, see the Foreign income return form guide.

If the SMSF received a supplementary dividend (or a share of it), in connection with the franked dividend, and the SMSF is entitled to a foreign income tax offset because the franked dividend is included in the SMSF's assessable income, you must reduce the Australian franking credits that the SMSF received directly or indirectly from a New Zealand company by the amount of the supplementary dividend (or the SMSF's share of it).

If the shares or interests are not held at risk as required under the holding period and related payments rules, or there is other manipulation of the imputation system, don't include the Australian franking credit in assessable income at label E and there is no entitlement to a franking tax offset.

You must also include the Australian franking credits that you include here at label E, at either Section D, item 13 – label:

• E1 Complying fund’s franking credits tax offset if the SMSF is a complying fund
• C2 Rebates and tax offsets if the SMSF is a non-complying fund.

The amount at label E could include any Australian franking credits attached to assessable franked distributions that the SMSF received from a New Zealand franking company either:

• directly
• indirectly through a partnership or trust.

Don't include:

• the dividend from the New Zealand company (include this at item 11 – label D1 Gross foreign income)
• New Zealand imputation credits (you cannot claim New Zealand imputation credits in Australia)
• franking credits attached to a dividend that is non-arm's length income of a complying SMSF (include these at item 11 – label U1 Net non-arm's length private company dividends).

For more information, see:

• Trans-Tasman imputation special rules
• Subdivision 220-B of the Income Tax Assessment Act 1997.

F Transfers from foreign funds

Did the SMSF receive amounts transferred from foreign super funds?

• No – Leave label F blank. Go to label H.
• Yes – Read on.

Write at label F the total of the following amounts transferred in 2023–24 from foreign super funds and schemes to a complying SMSF:

• the amount transferred that the member has made a written choice to have included in the SMSF's assessable income (under section 305-80 and subsection 295-200(2) of the ITAA 1997)
• assessable amounts transferred where the transferred amounts were in excess of what was 'vested' in the member at the time of transfer (subsection 295-200(1) of the ITAA 1997).

The amount at label F should not be reduced by any loss or outgoing related to the income.

Write in the Number box the number of transfers received from foreign super funds or schemes during 2023–24 that meet the criteria above.

Other transfers from foreign super funds or schemes are not assessable income for the SMSF (although they may be assessable income that needs to be reported in the member's personal income tax return). For more information, see Tax on transfers from foreign super funds.

Transfers from foreign super funds or schemes are not exempt from income tax under the exempt current pension income rules.

For more information, see sections 295-200 and 305-80 of the Income Tax Assessment Act 1997.

H Gross payments where ABN not quoted

Did the SMSF receive payments from which the payer had withheld an amount because the SMSF had not provided its ABN?

• No – Leave label H blank. Go to label I.
• Yes – Read on.

Write at label H the gross value of all payments made to the SMSF where payers withheld an amount because the SMSF had not provided its ABN. The amount at label H should not be reduced by any loss or outgoing related to the income.

The amount that you write at label H must be the gross value, that is, it must include both the amounts paid to the SMSF and the amounts that payers withheld.

The payers must give you a PAYG payment summary (or equivalent information) with their payment or as soon as practical after they make the payment. The PAYG payment summary:

• includes the information that you need to complete at label H
• must be kept with your tax records.

For more information see Record-keeping requirements.

You must also:

• include the corresponding credit for the tax withheld at Section D, item 13 –label H3 Credit for tax withheld – where ABN or TFN not quoted (non-individual)
• complete and attach a Non-individual PAYG payment summary schedule 2024.

If you include an amount at label H that is exempt current pension income, include it also at item 11 – label Y Exempt current pension income.

For more information, see:

• PAYG withholding
• Division 18 of Schedule 1 of the Taxation Administration Act 1953.

I Gross distribution from partnerships

Did the SMSF receive any gross distributions from partnerships?

• No – Leave label I blank. Go to labels J, K, L Dividends and franking credits.
• Yes – Read on.

Write at label I the total of all gross distributions from partnerships received in 2023–24. If the total amount is a loss, print L in the box to the right of the amount.

A distribution from a partnership can include different types of income. Include all types of income included in the distribution at label I except:

• capital gains (include these at item 11 – label A Net capital gain)
• foreign income, including New Zealand franking company dividends and supplementary dividends (include it at item 11 – label D1 Gross foreign income)
• part of a distribution on which family trust distribution tax or trustee beneficiary non-disclosure tax has been paid (don't include anywhere in Section B: Income)
• franking credits, if the SMSF is not entitled to a corresponding tax offset (don't include these anywhere in the SMSF annual return)
• the SMSF’s share of net income from pooled superannuation trusts (PSTs)
• non-arm's length income of a complying SMSF (include it at item 11 – label U3 Net other non-arm's length income).

For example, if a distribution from a partnership includes interest, include this interest income at label I rather than at item 11 – label C Gross interest.

If the partnership distributions included franking credits attached to dividends and the SMSF is entitled to a corresponding franking credits tax offset (see Entitlement to franking credits tax offset), include the amount of the franking credit at label I and also at either Section D item 13 – label:

• E1 Complying fund’s franking credits tax offset if the SMSF is a complying fund
• C2 Rebates and tax offsets if the SMSF is a non-complying fund.

If partnership distributions included amounts subject to foreign resident withholding in Australia, include the SMSF's share of credit for foreign resident withholding at label I and also at Section D, item 13 – label H2 Credit for tax withheld – foreign resident withholding.

If you include an amount at label I that is exempt current pension income, include it also at item 11 – label Y Exempt current pension income.

Keep a record of the following:

• full name of the partnership
• TFN of the partnership if known
• amount of income.

For more information, see Record-keeping requirements.

J, K, L Dividends and franking credits

Was the SMSF paid dividends?

• No – Leave labels J, K and L blank. Go to label M.
• Yes – Read on.

Dividends and non-share dividends from Australian entities may carry franking credits. We call such dividends franked dividends. Franking credits reflect tax the company has paid.

Dividends and non-share dividends with no franking credits are called unfranked dividends.

An SMSF's assessable income includes:

• unfranked dividends (include these at label J Unfranked dividend amount)
• franked dividends (include these at label K Franked dividend amount)
• franking credits (include these at label L Dividend franking credit if the SMSF is entitled to a corresponding tax offset).

Include non-share dividends at labels J, K and L in the same way as dividends. For more information about non-share dividends see Guide to the debt and equity tests.

If the SMSF was paid a dividend from a private company, you must establish whether the dividend is non-arm's length income. If the SMSF is a complying SMSF and it is non-arm's length income, include the dividend and franking credit at item 11 – label U1 Net non-arm's length private company dividends instead of at labels J, K or L.

J Unfranked dividend amount

Was the SMSF paid unfranked dividends, including unfranked non-share dividends?

• No – Leave label J blank. Go to label K.
• Yes – Read on.

Write at label J the total amount of unfranked dividends, and unfranked non-share dividends, that were paid to the SMSF. The amount at label J should not be reduced by any loss or outgoing related to the income.

If you include an amount at label J that is exempt current pension income, also include it at item 11 – label Y Exempt current pension income. Don't include unfranked dividends:

• that are a share of net income from a trust (include these at item 11 – label M Gross trust distributions)
• that are part of a distribution from a    
  • partnership (include these at item 11 – label I Gross distribution from partnerships)
  • pooled development fund (don't include the distribution anywhere in the SMSF's assessable income as it is exempt income but take it into account when calculating Section C item 12 – label M1 Tax losses deducted in section C)
• from a New Zealand franking company (include these at item 11 – label D1 Gross foreign income)
• on which family trust distribution tax has been paid
• that are non-arm's length income of a complying SMSF (include these at item 11 – label U1 Net non-arm's length private company dividends).

K Franked dividend amount

Was the SMSF paid franked dividends, including franked non-share dividends?

• No – Leave label K blank. Go to label L.
• Yes – Read on.

Write at label K the total amount of franked dividends, and franked non-share dividends, that were paid to the SMSF. The amount at label K should not be reduced by any loss or outgoing related to the income.

If you include an amount at label K that is exempt current pension income, also include it at item 11 – label Y Exempt current pension income.

Don't include:

• franking credits (include these at item 11 – label L Dividend franking credit)
• franked dividends that are a share of net income from a trust (include these at item 11 – label M Gross trust distributions)
• franked dividends that are part of a distribution from a partnership (include these at item 11 – label I Gross distribution from partnerships)
• franked dividends that are part of a distribution from a pooled development fund (unless you have elected to include the franked dividends in the SMSF's assessable income)
• franked dividends from a New Zealand franking company (include these at item 11 – label D1 Gross foreign income)
• franked dividends on which family trust distribution tax has been paid
• franked dividends that are non-arm's length income of a complying SMSF (include these at item 11 – label U1 Net non-arm's length private company dividends).

L Dividend franking credit

Were franking credits attached to dividends paid to the SMSF for which it is entitled to a franking credits tax offset?

• No – Leave label L blank. Go to label M.
• Yes – Read on.

Write at label L the total amount of the franking credits:

• attached to franked dividends, and franked non-share dividends, paid to the SMSF in 2023–24, and
• for which the SMSF is entitled to a franking credits tax offset (see Entitlement to franking credits tax offset).

In addition to including a franking credit at label L, you must also include it at either Section D – label:

• E1 Complying fund’s franking credits tax offset if the SMSF is a complying fund
• C2 Rebates and tax offsets if the SMSF is a non-complying fund.

If you include an amount at label L that is exempt current pension income, also include it at item 11 – label Y Exempt current pension income.

The amount at label L should not be reduced by any loss or outgoing related to the income.

Don't include:

• the dividend that the franking credit is attached to (include it at item 11 – label K Franked dividend amount)
• franking credits where the SMSF is not entitled to a franking credits tax offset (don't include these anywhere on the SMSF annual return)
• franking credits that are part of a share of net income from a trust (include these at item 11 – label M Gross trust distributions)
• franking credits that are part of a distribution from a partnership (include these at item 11 – label I Gross distribution from partnerships)
• Australian franking credits from a New Zealand franking company (include these at item 11 – label E Australian franking credits from a New Zealand company)
• franking credits that are part of a distribution from a pooled development fund (unless you have elected to include franked dividends and thus the franking credits in the SMSF's assessable income)
• franking credits on which family trust distribution tax has been paid
• franking credits attached to a dividend that is non-arm's length income of a complying SMSF (include these at item 11 – label U1 Net non-arm's length private company dividends).

M Gross trust distributions

Did the SMSF receive, or was the SMSF entitled to receive, a share of net income from other trusts?

• No – Leave label M blank. Go to labels R1, R2, R3, R6, R Assessable contributions.
• Yes – Read on.

Write at label M the total share of net income that the SMSF received or was entitled to receive from other trusts. The amount at label M can't be a loss. Complete the code box to the right of label M, according to Table 3.

If you report a distribution from a trust at item 11 – label M, complete a Trust income schedule 2024 and attach it to the SMSF annual return.

A share of net income from a trust can include different types of income. Include at label M all types of income that are included in a share of net income from another trust except:

• capital gains (include these at item 11 – label A Net capital gain)
• foreign income, including New Zealand franking company dividends and supplementary dividends (include it at item 11 – label D1 Gross foreign income)
• a share of net income on which family trust distribution tax or trustee beneficiary non-disclosure tax has been paid (don't include anywhere in Section B: Income)
• franking credits if the SMSF is not entitled to a corresponding tax offset (don't include these anywhere in the SMSF annual return)
• non-arm's length income of a complying SMSF (include it at item 11 – label U2 Net non-arm's length trust income).

If the share of net income from trusts included franking credits attached to dividends and the SMSF is entitled to a corresponding franking credits tax offset (see Entitlement to franking credits tax offset), include the amount of the franking credit at label M and also at either Section D – label:

• E1 Complying fund’s franking credits tax offset if the SMSF is a complying fund
• C2 Rebates and tax offsets if the SMSF is a non-complying fund.

If the share of net income from trusts included amounts subject to foreign resident withholding in Australia, include the SMSF's share of credit for foreign resident withholding at label M and also at Section D, item 13 – label H2 Credit for tax withheld – foreign resident withholding.

The share of net income at label M may include payments from a closely held trust, including the SMSF's share of credits if any amounts were withheld because a TFN was not provided. If amounts were withheld because a TFN was not provided then the SMSF's share of credits for the withheld amounts are included at Section D, item 13 – label H5 Credit for TFN amounts withheld from payments from closely held trusts.

If you include an amount at label M that is exempt current pension income, also include it at item 11 – label Y Exempt current pension income.

A distribution from a trust is non-arm's length income if either:

• the SMSF does not have a fixed entitlement to income from that trust (for example, it is a discretionary trust)
• the SMSF has a fixed entitlement to income from the trust (generally unit trusts), which is derived under a scheme where the parties were not dealing with each other at arm's length and either or both of the following applies (see subsection 295-550(5) of the ITAA 1997)    
  • the income is greater than might have been expected had the parties been dealing with each other at arm’s length in relation to the scheme
  • the loss, outgoing or expenditure (either revenue or capital in nature) incurred in acquiring the entitlement, or in gaining or producing that income, is less than (including a nil amount) what might have been expected had the parties been dealing with each other at arm's length in relation to the scheme.

Keep a record of the:

• full name of the trust
• TFN of the trust
• amount paid by the trust to the SMSF.

For more information about record keeping, see Record-keeping requirements.

Code

You must print a letter from table 3 in the code box to the right of label M Gross trust distributions if you write an amount at label M.

Print the letter from table 3 that best describes the type of trust from which you received the income you wrote at label M. If this income is from more than one type of trust, print the letter that describes the type of trust from which you received the greatest amount of income.

If you cannot identify the type of trust from which the SMSF received a share of net income, contact the trustee of that trust.

Table 3: Trust type codes

Code letter	Type of trust
D	Deceased estate
E	Testamentary trust A trust that resulted from a will, codicil, court order, or intestacy.
F	Fixed trust (other than the fixed unit trusts and public unit trusts described at codes U, P and Q) A fixed trust is a trust in which persons have fixed entitlements to all of the income and capital of the trust at all times during the income year. The ‘fixed entitlement’ test operates in the manner described in Taxation Ruling TR 2006/7.
H	Hybrid trust A hybrid trust is a trust which is not a fixed trust but in which persons have fixed entitlements to income or capital of the trust during the income year. The ‘fixed entitlement’ test operates in the manner described in Taxation Ruling TR 2006/7.
S	Discretionary trust – where the main source of income of the trust is from service and management activities A discretionary trust is a trust: which is neither a fixed trust nor a hybrid trust, and under which a person or persons benefit from income or capital of the trust upon the exercise of a discretion by a person or persons, usually the trustee.
T	Discretionary trust – where the main source of income of the trust is from trading activities
I	Discretionary trust – where the main source of income of the trust is from investment activities
M	Cash management unit trust A cash management unit trust is a unit trust which: pools the funds of separate unit holders, and primarily invests in a range of short term securities.
U	Fixed unit trust (including a Corporate Collective Investment Vehicle (CCIV) sub-fund trust; other than a public trust described in codes P or Q) A fixed unit trust is a fixed trust in which interest in the income and capital of the trust are represented by units.
P	Public unit trust – listed (other than a cash management unit trust) A public unit trust is a fixed unit trust which is a widely held unit trust (as defined in section 272-105 of Schedule 2F to the Income Tax Assessment Act 1936) at all times during the income year.
Q	Public unit trust – unlisted (other than a cash management unit trust) A public unit trust in which none of its units were listed for quotation in the official list of a stock exchange in Australia or elsewhere during the income year.

 

R1, R2, R3, R6, R Assessable contributions

Did the SMSF have assessable contributions?

• No – Leave labels R1, R2 and R6 blank. Answer labels R3 and R.
• Yes – Read on.

Include at labels R1, R2, R3 and R6 all contributions to the SMSF that are assessable income.

The following types of contributions are not part of the SMSF’s assessable income, don't include them at labels R1, R2, R3 or R6:

• contributions made by a member that are not assessable personal contributions
• super co-contributions and government super contributions
• contributions for a person under 18 which are not made by, or on behalf of, the person’s employer
• amounts transferred to the SMSF for a member from the member's spouse's super as a result of a contributions splitting arrangement (for more information, see Contributions splitting)
• amounts transferred to the SMSF from another super fund because of a family law obligation (such as a super agreement or a Family Law Court order as a result of a marriage or relationship breakdown)
• spouse contributions for which the contributor can't claim a deduction
• contributions where a member has elected to treat the contribution as a re-contribution of a COVID-19 early release amount.

For more information, see Subdivision 295-C of the Income Tax Assessment Act 1997.

Contributions caps

Caps apply to contributions made to a member’s super account. Members that contribute more than these caps may have to pay extra tax. For more information on the contributions caps, see Cap limits and tax on super contributions.

R1 Assessable employer contributions

Did the SMSF receive assessable employer contributions?

• No – Leave label R1 blank. Go to label R2.
• Yes – Read on.

Write at label R1 the total of all assessable contributions received by the SMSF for members where the contribution was made by someone other than the member. The amount at label R1 should not be reduced by any loss or outgoing related to the income.

Assessable employer contributions received in 2023–24 must be included at label R1 even if they were not allocated to the member’s account until the following financial year.

The amount at label R1 includes:

• contributions paid by an employer (including amounts contributed under effective salary sacrifice arrangements) to  
  • a complying SMSF
  • a non-complying SMSF that is an Australian super fund
  • an SMSF that is not an Australian super fund where the contributions relate to a period when the member was an Australian resident, or was a foreign resident deriving employment or similar income, such as salary or wage income, that is subject to Australian withholding payment rules
• shortfall amounts paid by us to a complying SMSF under the provisions of the Superannuation Guarantee (Administration) Act 1992
• amounts transferred by us from the Superannuation Holding Account special account to a complying SMSF under the provisions of the Small Superannuation Accounts Act 1995, other than amounts which represent super co-contributions or low income super amounts
• most amounts contributed for a member by other third parties (the total of any amounts written in sections F and G at label G Other third party contributions).

Don't include contributions received for a member who has not quoted their TFN and that you are required to include at label R3 No-TFN-quoted contributions.

Assessable contributions from employers or other third parties are not exempt from income tax under the exempt current pension income rules.

R2 Assessable personal contributions

Did the SMSF receive assessable personal contributions?

• No – Leave label R2 blank. Go to label R3.
• Yes – Read on.

Write at label R2 the total of:

• assessable personal contributions
• any untaxed element of a rollover super benefit, up to the untaxed plan cap amount ($1.650 million in 2023–24).

The amount of a rollover super benefit with an untaxed element is included in the income year in which it is received by the SMSF.

The amount at label R2 should not be reduced by any loss or outgoing related to the income.

Assessable personal contributions received in 2023–24 must be included at label R2 even if they were not allocated to the member’s account until the following financial year.

Personal contributions are assessable only if the member has provided a valid notice stating their intent to claim a deduction for their contributions and the SMSF trustee has acknowledged receipt of the notice. The contribution is included in the income year in which it is received if the SMSF trustee receives the notice by the time the SMSF lodges its annual return for that income year. Otherwise, the contribution is included in the income year in which the notice is received. For information about deductions for a personal super contribution, see Notice of intent to claim or vary a deduction for personal super contributions.

If the SMSF receives a notice varying the amount of a previous valid Notice of intent to claim a deduction for personal super contributions and:

• you have not yet lodged the annual return that includes the contribution as assessable income, write at label R2 the reduced amount of the personal contribution, or
• you have already lodged an annual return that included the contribution as assessable income then you can either  
  • amend the annual return for the income year that included the contribution as assessable income, or
  • deduct an amount at Section C, item 12 – label L1 Other amounts, in the income year the SMSF received the notice varying the amount.

Assessable personal contributions are not exempt from income tax under the exempt current pension income rules.

For more information, see Notice of intent to claim or vary a deduction for personal super contributions.

R3 No-TFN-quoted contributions

Did the SMSF receive employer contributions for a member that has not provided their TFN to the SMSF?

• No – Write 0 (zero) at label R3. Go to label R6.
• Yes – Read on.

Write at label R3 the total of all assessable contributions that the SMSF received in 2023–24 for all members who had not quoted their tax file number (TFN) and where either:

• a member's account was opened on or after 1 July 2007
• a member's total assessable contributions for 2023–24 were more than $1,000.

The amount at label R3 should not be reduced by any loss or outgoing related to the income.

Don't include employer contributions at label R3 if both:

• the member's account was opened before 1 July 2007
• the member's total assessable contributions for 2023–24 are $1,000 or less (include these employer contributions at label R1 Employer contributions).

Label R3 is mandatory. If you leave label R3 blank, you will have specified a zero amount.

Tax on no-TFN-quoted contributions

The SMSF has to pay additional tax on no-TFN-quoted contributions. This additional tax must be paid regardless of any tax offsets or amounts the SMSF may have transferred to a life insurance company or PST. For the tax rates, see table 4.

Table 4: Tax rates on no-TFN-quoted contributions

SMSF status	Tax rate (on all assessable contributions)	Additional tax rate (on no-TFN-quoted contributions)	Overall tax rate (on no-TFN-quoted contributions)
Complying	15%	32%	47%
Non-complying	45%	2%	47%

The SMSF will show in Section D: Income tax calculation statement:

• the tax payable (at the standard rate of income tax) on the no-TFN-quoted contributions at label T1 Tax on taxable income
• the additional tax payable on the no-TFN-quoted contributions at label J Tax on no-TFN-quoted contributions.

No-TFN-quoted contributions are not exempted from income tax under the exempt current pension income rules.

If a member provided their TFN to the SMSF for the first time in 2023–24, the SMSF may be able to recover the no-TFN-quoted contributions tax it paid in one of the most recent 3 income years ending before 2023–24 by claiming a no-TFN tax offset. For information on whether the SMSF is able to claim this offset, see Section D, item E2 No-TFN tax offset.

For more information, see Section 295-610 of the Income Tax Assessment Act 1997.

R6 Transfer of liability to life insurance company or PST

Did the SMSF transfer an amount to a life insurance company or pooled superannuation trust (PST) under an agreement that meets the requirements of section 295-260 of the Income Tax Assessment Act 1997?

• No – Leave label R6 blank. Go to label R.
• Yes – Read on.

Write at label R6 the total amount that would otherwise have been included in the complying SMSF's assessable income for 2023–24 that the trustee of the SMSF (the transferor) has agreed to transfer to a life insurance company or PST (the transferee) under an agreement with that transferee entity. The amount at label R6 should not be reduced by any loss or outgoing related to the income.

The SMSF will not pay tax (at the rate of 15%) on the amount transferred to the life insurance company or PST. The amount of the income transferred is included in the transferee’s assessable income instead. However, if a contribution is a no-TFN-quoted contribution, the SMSF must still pay tax on the no-TFN-quoted contribution (at the rate of 32%); the SMSF can't transfer the tax liability on the no-TFN-quoted contribution income.

Keep all relevant documents as evidence of the transferee’s consent to accept the transfer of assessable contributions and the associated tax liability.

For more information, see Section 295-260 of the Income Tax Assessment Act 1997.

R Assessable contributions

Did you write amounts at R1, R2, R3 or R6?

• No – Leave label R blank. Go to label S.
• Yes – Read on.

Write at label R the total assessable contributions received by the SMSF. That total should not be reduced by any loss or outgoing related to the income.

To work out the amount you write at label R:

• add the amounts you wrote, at labels  
  • R1 Assessable employer contributions
  • R2 Assessable personal contributions
  • R3 No-TFN-quoted contributions
• subtract from that amount (R1 + R2 + R3), the amount at label  
  • R6 Transfer of liability to life insurance company or PST.

Assessable contributions are not exempt from income tax under the exempt current pension income rules.

S Other income

Did the SMSF receive any income that is not included at another item in Section B?

• No – Leave label S blank. Go to label T.
• Yes – Read on.

Write at label S any assessable income of the SMSF that does not fall into any other category in Section B. The amount at label S should not be reduced by any loss or outgoing related to the income.

Write in the code box the letter from Table 5 that best describes the greatest amount you include at label S Other income.

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

Table 5: Codes for other income

Code letter	Type of income
B	Assessable balancing adjustment amount
C	Listed investment company capital gain amount
F	Forex gains
R	Rebate or refund of premium paid to provide death or disability benefits
T	Taxation of financial arrangements (TOFA) amounts
W	Gross payments subject to foreign resident withholding (excluding capital gains)
O	Other types of income not listed above

Assessable balancing adjustment amount (code B)

If the SMSF ceased to hold or to use a depreciating asset, you need to calculate a balancing adjustment amount which you include at either:

• label S Other income (this question) if the balancing adjustment is assessable income
• section C, item 12 – label L1 Other amounts (deductions) or label L2 Other amounts (non-deductible expenses).

For more information, see Guide to depreciating assets 2024.

Listed investment company (LIC) capital gain amount (code C)

If the SMSF received a distribution from a partnership, or a share of net income from a trust and if that partnership or trust claimed a deduction for a LIC capital gain amount, you must include at label S:

• one-third of its share of the deduction claimed by the partnership or trust, if the SMSF is a complying fund
• its entire share of the deduction claimed by the partnership or trust, if the SMSF is a non-complying fund.

Foreign exchange (forex) gain (code F)

If the SMSF has any assessable foreign exchange gains that have not been shown at any other category of income, include the total of such gains at label S.

For more information, see Foreign exchange gains and losses.

Rebate or refund of premium paid to provide death or disability benefits (code R)

The SMSF, if it is a complying SMSF, has this type of income if it received a rebate on, or refund of, an insurance premium during 2023–24 where the original insurance premium:

• was to provide super benefits in the event of  
  • death
  • a terminal medical condition
  • disability or temporary inability to engage in gainful employment, and
• had been claimed as a deduction (at section C, item 12 – label F1 Insurance premiums members) in a previous SMSF annual return.

You must include the amount of such income at label S.

For more information, see item 4 of the table in Section 295-320 and Section 295-465 of the Income Tax Assessment Act 1997.

Taxation of financial arrangements (TOFA) amounts (code T)

If the TOFA rules apply to calculate an assessable gain or deductible loss on the SMSF’s financial arrangements, include at label S any assessable gains relating to financial arrangements. TOFA amounts that have been included elsewhere should not be included here.

Complete Section I: Taxation of financial arrangements if you include at label S an amount determined under the TOFA rules.

For more information about whether the TOFA rules apply, see Section I: Taxation of financial arrangements.

Gross payments subject to foreign resident withholding (excluding capital gains) (code W)

Gross payments subject to foreign resident withholding (excluding capital gains) refers to payments made to the SMSF where the payer withheld an amount from the payment because the SMSF is a foreign fund.

Only an SMSF that is a foreign fund should have a gross payment subject to foreign resident withholding in Australia.

The amount that you write at label S must be the gross value. That means that the amount you write must include both the amount:

• paid to the SMSF
• that payers withheld from these payments.

These payers must provide you with a PAYG payment summary by 14 July following the end of the financial year. The PAYG payment summary has the information that you need to include at label S.

If you write an amount at label S for gross payments subject to foreign resident withholding in Australia, you must also complete and attach a Non-individual PAYG payment summary schedule.  Keep the PAYG payment summary (or equivalent information) with your tax records.

The amount you write at label S for gross payments subject to foreign resident withholding in Australia does not include:

• payments received by an Australian SMSF that was subject to foreign resident withholding in another country (include these at item 11 – label D1 Gross foreign income)
• payments subject to foreign resident withholding in Australia that were distributed to the SMSF from partnerships or included in a share of net income from trusts (include these at item 11 – label I Gross distribution from partnerships or item 11 – label M Gross trust distributions as appropriate)
• payments where the amount of foreign resident withholding in Australia was reduced to nil because the income was not taxable under a double tax agreement.

If you include a gross payment subject to foreign resident withholding in Australia at label S, you can also claim a credit for tax withheld at Section D, item 13 – label H2 Credit for tax withheld – foreign resident withholding.

For more information, see Division 18 of Schedule 1 of the Taxation Administration Act 1953.

Other types of income not listed above (code O)

If the greatest amount that you include at label S Other income is not one of the types of income listed above for codes B, C, F, R, T or W, then use code O for 'other'.

T Assessable income due to changed tax status of fund

Did the SMSF change from a complying to non-complying fund, or from a foreign fund to an Australian super fund?

• No – Leave label T blank. Go to labels U1, U2, U3 and U.
• Yes – Read on.

Write at label T the amount that is to be included in the SMSF’s assessable income because it changed from either:

• complying to non-complying at the beginning of 2023–24
• a foreign fund to an Australian super fund at the beginning of 2023–24.

The amount at label T should not be reduced by any loss or outgoing related to the income.

You must:

• work out the amount of ordinary income and statutory income from previous years using the appropriate formula below
• write the amount you worked out at label T.

A change in the SMSF's compliance or residency status can change its tax rate (see the tax rates at Section D, item 13 – label T1 Tax on taxable income).

Assessable income arising from a change in the tax status of the SMSF is not exempt from income tax under the exempt current pension income rules.

The SMSF became a non-complying SMSF for 2023–24

If the SMSF was a complying SMSF at the end of 2022–23 and became a non-complying SMSF for 2023–24, include at label T an amount calculated using formula A. Including this amount at label T means that the SMSF loses the benefit of the tax concessions that it had when it was a complying SMSF.

Formula A

Asset value − non-concessional contributions = assessable amount to be included at label T

Asset value is the total market value of the SMSF’s assets at 30 June 2023 (that is, immediately before the start of the income year in which the SMSF became non-complying).

Non-concessional contributions are the total of:

• the part of the crystallised undeducted contributions that relate to the period after 30 June 1983, and
• the contributions segment for current members at the time that have not been, and can't be, deducted.

Write at label T the amount you calculated using formula A.

When you work out Section D, item 13 –label T1 Tax on taxable income in, the amount you worked out using formula A is taxed at 45%.

Legislation

Sections 295-320 and 295-325 of the Income Tax Assessment Act 1997

The SMSF changed from a foreign fund to an Australian super fund for 2023–24

If the SMSF was a foreign super fund for 2022–23 and became an Australian super fund for 2023–24, include at label T an amount calculated using formula B.

Formula B

Asset value − member contributions = assessable amount to be included at label T

Asset value is the total market value of the SMSF’s assets at 30 June 2022 (that is, immediately before the start of the income year in which the SMSF became an Australian super fund).

Member contributions is the amount in the SMSF at that time representing contributions made by current members.

Write at label T the amount you worked out using formula B.

When you calculate Section D, item 13 – label T1 Tax on taxable income the amount you worked out using formula B is taxed at:

• 15% if the fund changed from a foreign fund to a complying Australian super fund
• 45% if the fund changed from a foreign fund to a non-complying Australian super fund.

Note that the SMSF is not entitled to a tax offset (at Section D, item 13 – label C1 Foreign income tax offset) for foreign income tax paid before the start of the income year on income reported at label T as a result of the change in the tax status of the SMSF.

For more information. see Sections 295-320 and 295-330 of the Income Tax Assessment Act 1997.

U1, U2, U3 and U Non-arm's length income

Did the SMSF receive non-arm's length income?

• No – Leave labels U1, U2, U3 and U blank. Go to label W.
• Yes – Read on.

Was the SMSF a complying SMSF for 2023–24?

• No – Leave labels U1, U2, U3 and U blank. Go to label W.
  
  Write the non-complying SMSF's non-arm's length income where appropriate at labels A to T.
  
  Then go to label W.
• Yes – Read on.

Consider whether any income that the SMSF earned in 2023–24 was earned through a transaction that was not at arm's length.

For more information about identifying the SMSF's non-arm's length income, see Non-arm's length income.

Don't include at labels U1, U2, U3, U or any other label in Section B – non-arm’s length income as a result of non-arm’s length expenses that have a sufficient nexus to all ordinary or statutory income of the fund (general expense) rather than a particular asset or assets of the fund. These general expenses result in non-arm’s length income calculated using the ‘Twice the difference approach’ and will be taken into account when calculating label T1 Tax on taxable income in Section D using the 'Lesser of' calculation – refer to T1 in Section D. Non-arm's length income is not exempt from income tax under the exempt current pension income rules.

Net non-arm's length income

Each amount of non-arm’s length income is reduced by any deductions attributable, either in whole or in part, to that income.

Deductions against that income are those that relate exclusively to the non-arm's length income and as much of other deductions that appropriately relate to that income. The amounts deducted against the SMSF’s non-arm’s length income at labels U1, U2 or U3 should not be included at any label in Section C. However, where non-arm’s length general expenses which give rise to the 'Twice the difference approach' are actually incurred, then to the extent that they are deductible, include the expense at the appropriate label in Section C – Deductions and non-deductible expenses .

Non-arm's length losses

If the net amount of non-arm's length income is a loss, don't show the loss at label U. The loss may be offset against future non-arm's length income. Keep a record of the loss amount with the SMSF's tax records.

U1 Net non-arm’s length private company dividends

Was the SMSF paid non-arm’s length private company dividends?

• No – Leave label U1 blank. Go to label U2.
• Yes – Read on.

Write at label U1 the total of:

• non-arm’s length private company dividends which were paid to the complying SMSF in 2023–24
• franking credits attached to the non-arm's length private company dividends if the SMSF is entitled to a corresponding franking credits tax offset (see Entitlement to franking credits tax offset)
• subtract deductible expenses related to earning the non-arm's length private company dividends.

If you are unsure whether some or all of the SMSF's income is non-arm's length, see Non-arm's length income.

Include non-share dividends that are non-arm's length income at label U1.

Don't include private company dividends that are arm's length income (include these at Section B, item 11 – labels A to T as appropriate).

In addition to including a franking credit at label U1, you must also include it at either Section D, item 13 – labels:

• E1 Complying fund’s franking credits tax offset if the SMSF is a complying fund
• C2 Rebates and tax offsets if the SMSF is a non-complying fund.

Non-arm's length private company dividends are not exempt from income tax under the exempt current pension income rules.

U2 Net non-arm's length trust distributions

Did the SMSF receive a share of net income from a trust that is non-arm's length?

• No – Leave label U2 blank. Go to label U3.
• Yes – Read on.

Write at label U2 the total of:

• any non-arm's length income which the complying SMSF received in 2023–24 as a share of net income from a trust
• subtract deductible expenses related to earning the amount at label U2.

If you are unsure whether a share of net income from a trust is non-arm's length, see Non-arm's length income.

Include the following types of income at label U2 if the income is non-arm's length income and received as a share of net income from a trust:

• net capital gains
• dividends (or non-share dividends), along with any attached franking credits if the SMSF is entitled to a corresponding tax offset (see Entitlement to franking credits tax offset).

In addition to including a franking credit at label U2, you must also include it at either Section D, item 13 – labels:

• E1 Complying fund’s franking credits tax offset if the SMSF is a complying fund
• C2 Rebates and tax offsets if the SMSF is a non-complying fund.

Don't include a share of net income from a trust that is arm's length income (include this at Section B, item 11 – label M Gross trust distributions).

A share of net income from a trust that is non-arm's length is not exempt from income tax under the exempt current pension income rules.

If you report a trust distribution that is non-arm's length at item 11 – label U2, complete a Trust income schedule 2024 and attach it to the SMSF annual return.

U3 Net other non-arm's length income

Does the SMSF have any other non-arm’s length income?

• No – Leave label U3 blank. Go to label U.
• Yes – Read on.

Write at label U3 any non-arm's length income which the complying SMSF has for 2023–24 and that was not included at labels U1 or U2. If you are unsure whether the income is non-arm's length, see Non-arm's length income.

Don't include at label U3:

• non-arm's length income that is more appropriately included at labels U1 Net non-arm's length private company dividends or U2 Net non-arm's length trust distributions
• non-arm’s length income as a result of a non-arm's length general expense. Non-arm’s length income as a result of a non-arm's length general expense is calculated using the 'Twice the difference approach' (being twice the difference between the amount that might have been expected to be incurred if the parties had been dealing at arm’s length and the amount actually incurred (including a nil amount)) – this non-arm's length income will be taken into account when calculating the ‘Tax on taxable income’ at label T1 in Section D
• income that is arm's length income (write it at Section D, item 13 – labels A to T as appropriate).

Non-arm's length income is not exempt from income tax under the exempt current pension income rules.

U Net non-arm's length income

Add the amounts you wrote at labels U1, U2 and U3.

Note: Due to retrospective law changes for non-arm’s length general expenses, label U may not align with the descriptor on the tax return being ‘subject to 45% tax rate’.

When you work out Section D, item 13 – label T1 Tax on taxable income, a tax rate of 45% is applied to the income you write at label U.

W Gross income

Add the amounts from Section B, item 11 – labels A to U, including D and R.

Don't include the following label amounts because they make up the amounts at labels D, R and U:

• D1 Gross foreign income
• R1 Assessable employer contributions
• R2 Assessable personal contributions
• R3 No-TFN-quoted contributions
• R6 Transfer of liability to life insurance company or PST
• U1 Net non-arm's length private company dividends
• U2 Net non-arm's length trust distributions
• U3 Net other non-arm's length income.

Write the total at label W. If the SMSF has no gross income, write 0 (zero) at label W. If the amount at label W is a loss, print L in the Loss box at the right of the amount.

Y Exempt current pension income

Did the SMSF pay retirement phase super income stream benefits to a member in 2023–24?

• No – Leave label Y blank. Go to label V.
• Yes – Read on.

If the SMSF paid retirement phase super income stream benefits to one or more members during 2023–24, some, or all, of its ordinary income and statutory income may be exempt from income tax under the exempt current pension income rules. This exempt income is called 'exempt current pension income' or ECPI.

Don't reduce the exempt income at label Y by the amount of expenses incurred in deriving that exempt income.

Expenses incurred in gaining or producing exempt income are not generally deductible. Those expenses must be shown as non-deductible expenses in Section C.

The amount that you write at label Y must be the same as the amount at Section A, item 10 – label A Exempt current pension income amount.

To work out your SMSF's ECPI, see How expenses are treated when an SMSF has ECPI.

For more information, see Subdivision 295-F of the Income Tax Assessment Act 1997.

If your SMSF has PAYG instalments

If you use the instalment rate method to calculate your SMSF's PAYG instalments, you must exclude the SMSF's exempt current pension income from the amount you write at label T1 PAYG instalment income on the PAYG activity statement. See PAYG instalments.

V Total assessable income

Work out the SMSF's total assessable income or loss for 2023–24: subtract Y Exempt current pension income from W Gross income.

Write the answer at label V. If the SMSF has no total assessable income, write 0 (zero) at label V. If the amount at label V is a loss, print L in the Loss box at the right of the amount.

Continue to: Section C: Deductions and non-deductible expenses – item 12

Return to: Instructions to complete your SMSF annual return 2024