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Section D: Income tax calculation statement – item 13

You must complete Section D. Calculate the amount of tax and other charges payable by, or refundable to, the SMSF.

Last updated 1 July 2024

Mandatory labels

You must complete labels A, T1, J, T5 and I in this section.

This section works out the amount of tax and other charges payable by, or refundable to, the SMSF. We also use the information which you provide in this section to work out the SMSF's 2024–25 PAYG instalments (if applicable to the SMSF).

Work through each label from A Taxable income to S Amount due or refundable and either:

  • write the relevant amount if the question applies to your SMSF
  • write 0 (zero) if the question  
    • does not apply to your SMSF, and
    • is one of the mandatory labels A, T1, J, T5 and I
  • leave the answer box blank for any other question that does not apply to your SMSF.

Answer the questions in their sequence. Some questions rely on information you have already entered in previous questions.

On pages 6 and 7 you will need to go through the questions in the left-hand column (labels C1–2, D1–4, E1–4, H2–8) before you can complete the 3 questions in the right-hand column (labels C, D, E, H).

Entitlement to franking credits tax offset

Under the imputation system, tax paid by a company can be passed on to its members (shareholders) as a credit (referred to as a franking credit). The member may be able to claim a tax offset for that franking credit (referred to as a franking credits tax offset).

If the SMSF receives dividends with franking credits attached, and none of the exceptions in the following paragraph apply, the SMSF can claim a franking credits tax offset equal to the amount of the franking credit or the SMSF's share of the franking credit.

The SMSF is not entitled to a franking credits tax offset if:

If the SMSF is entitled to a franking credits tax offset, include the amount of the franking credit (along with the dividend income) at the appropriate question in Section B and include the franking credit amount at either label:

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

A complying SMSF is entitled to a refund if it is unable to fully utilise the tax offset in reducing its income tax whereas a non-complying SMSF is not entitled a refund of the unused portion of a tax offset amount.

13 Calculation statement

In this section, complete labels:

A, T1, J and B Calculation of gross tax

Section D labels A, T1, J, T5 and I are mandatory. If you leave these labels blank, you will have specified a zero amount.

A Taxable income

You wrote the SMSF's taxable income, or its loss, at Section C, item 12 – label O Taxable income or loss.

Is the amount at label O Taxable income or loss a loss?

  • No – Transfer the amount from Section C, item 12 – label O Taxable income or loss.
  • Yes – Write 0 (zero) at label A. Go to label T1.

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

T1 Tax on taxable income

Is the amount at label A zero?

  • Yes – Write 0 (zero) at label T1. Go to label J.
  • No – Read on.

Is the SMSF a complying SMSF for the income year?

If you answer No:

  • All assessable income for a non-complying SMSF is taxed at 45%, whether arm's length income, non-arm's length income or arising from a change in the SMSF's tax status.
  • Multiply A by 45%.
  • Write the result at label T1.

If you answer Yes, different tax rates apply to arm's length and non-arm's length income.

  • Add 45% of the lesser of (the ‘Lesser of’ calculation):
    • U Net non-arm's-length income (in Section B), plus the total non-arm’s length income that arises due to non-arm's length general expenses (if any)

      Where, for each general expense, the amount of the non-arm’s length income is calculated as:
      • the difference between the amount of loss, outgoing or expense (revenue or capital in nature) expected to be incurred if the parties had been dealing at arm’s length and the amount of loss, outgoing or expense (revenue or capital in nature) actually incurred (nil if no loss, outgoing or expense was incurred), with the result multiplied by 2 (the ‘Twice the difference approach’ amount)
        Note: Don't reduce this amount by any deduction, including the amount of non-arm's length general expense actually incurred and
      • the total taxable income for the year written at label O in Section C less any assessable contributions you have written at label R in Section B and adding any deductions against those contributions.
  • 15% of (A in Section D less the result of the ‘Lesser of’ calculation above).
  • The result is the tax on the SMSF's taxable income before applying rebates, tax offsets, and credits. Write the result at label T1, then go to label J.

Label T1 is mandatory. If you leave label T1 blank, you will have specified a zero amount.

J Tax on no-TFN-quoted contributions

If the SMSF received no-TFN-quoted contributions (recorded at Section B, item 11 – label R3 No-TFN-quoted contributions), it pays extra tax on those contributions.

Did the SMSF receive contributions from a member who has not provided their TFN?

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

Extra tax applies to no-TFN-quoted contributions. To work out the extra tax, multiply the no-TFN-quoted contributions by:

  • 32% if the SMSF is a complying SMSF
  • 2% if the SMSF is a non-complying SMSF.

Write the result at label J.

All SMSFs, complying and non-complying, have an overall tax rate of 47% on no-TFN-quoted contributions:

  • complying SMSFs pay 15% (at label T1) and 32% (at label J), a total of 47%
  • non-complying SMSFs pay 45% (at label T1) and 2% (at label J), a total of 47%.

You must complete label J. If you leave label J blank, you specify a zero amount.

B Gross tax

Write at label B the total of label T1 and label J. If the sum is zero, write 0 (zero) at label B.

Example: calculating B Gross tax (without non-arm's length income)

SMSF B is a complying SMSF. It does not have any non-arm's length income or no-TFN-quoted contributions.

SMSF B calculated its taxable income as $14,500 which it wrote at Section C, item 12 – label O Taxable income or loss and also at Section D, item 13 – label A Taxable income.

SMSF B calculates its tax on taxable income at label T1 to be $2,175 as follows:

  • Rate: 15%
  • Income: $14,500
  • Tax: $2,175.

SMSF B does not have any no-TFN-quoted contributions so it writes $0 at label J Tax on no-TFN-quoted contributions.

Label B Gross tax is the sum of label T1 and label J ($2,175 + $0).

In the SMSF annual return, SMSF B writes:

Section D Income tax calculation statement (without non-arm's length income)

Section D: Fields

Amounts
$

A Taxable income

14,500

T1 Tax on taxable income

2,175

J Tax on no-TFN-quoted contributions

0

B Gross tax

2,175

 

End of example

 

Example: calculating B Gross tax (with non-arm's length income)

SMSF BB is a complying SMSF. It has non-arm's length income but does not have any no-TFN-quoted contributions.

SMSF BB acquires accounting services (with a market value of $7,000) from Malia, one of the 4 members of SMSF BB, for $4,000. The accounting services were general in nature and didn't relate to any particular asset or assets so are a general expense. The non-arm’s length expense provisions apply to this expense.

The total income of SMSF BB was $23,000 in rent from a rental property which is rented to Malia’s accounting business. Had the property been rented at arm’s length, it might have been expected to receive $15,000 in rent. The non-arm’s length income provisions apply to make the rental income non-arm’s length income. Maintenance was carried out on the commercial property at arm’s length constituting $8,000 in eligible deductions.

Further, assessable contributions of $10,000 were made in that income year to which a $1,000 deduction applies.

SMSF BB calculates its taxable income as $20,000. Made up of:

  • rental income of $23,000
  • plus assessable contributions of $10,000
  • less deductions for maintenance of $8,000
  • less deduction for accounting fees of $4,000
  • less deduction for assessable contributions of $1,000.

They show the total at label O Taxable income or loss in Section C and also at label A Taxable income in Section D.

Net non-arm’s length income of $15,000 (rental income of $23,000 less $8,000 deductions for maintenance) was written at label U3 Net other non-arm’s length income and is also included at label U Net non-arm’s length income in section B. The non-arm’s length income that has arisen as a result of the accounting expense is not disclosed at the labels U1, U2, U3, and U, instead it is taken into account at the calculation for label T1 Tax on taxable income.

Note: Due to the changes to the rules for non-arm’s length expenses for superannuation entities under the Treasury Laws Amendment (Support for Small Business and Charities and Other Measures) Act 2024External Link, the amount you have written as non-arm’s length income at label U Net non-arm's-length income in Section B may not be the amount that is taxed at the highest marginal rate. Instead, the amount calculated under the ‘Lesser of’ non-arm’s length component (NALC) calculation is taxed at the highest marginal rate.

In this example, the ‘lesser of’ NALC is calculated as the lesser of:

  • $21,000 – calculated as:
    • label U at Section B, being the net rental income of $15,000 ($23,000 - $8,000) plus
    • twice the difference amount of $6,000 (($7,000 − $4,000) × 2) and
  • $11,000 worked out as taxable income of $20,000 less $10,000 assessable contributions plus $1,000 deduction against assessable contributions.

Accordingly, the NALC is $11,000. Arm’s length income (low tax component) is $9,000 worked out as taxable income of $20,000 less the non -arm’s length income of $11,000.

SAF BB's calculation of tax on taxable income to show at T1

Description

Calculation

Tax

Tax on low tax component

15% of $9,000

$1,350

Tax on non-arms length component

45% of $11,000

$4,950

T1 Tax on taxable income

$1,350 + $4,950

$6,300

SMSF BB does not have any no-TFN-quoted contributions so they write $0 at label J Tax on no-TFN-quoted contributions.

Label B Gross tax is the total of label T1 and label J ($3,525 + $0).

In the SMSF annual return, SMSF BB writes:

Section D Income tax calculation statement (with non-arm's length income)

Section D: Fields

Amounts
$

A Taxable income

14,500

T1 Tax on taxable income

3,525

J Tax on no-TFN-quoted contributions

0

B Gross tax

3,525

End of example

C1, C2, C Non-refundable non-carry forward tax offsets

Non-refundable non-carry forward tax offsets (if the SMSF is entitled to them) reduce the SMSF's gross tax. If the total of the 'non-refundable non-carry forward' tax offsets is greater than the gross tax, the excess can't be carried forward and is lost. If the SMSF's gross tax is greater than the total of non-refundable non-carry forward tax offsets, the remaining tax is shown at Section D, item 13 – label T2 Subtotal 1.

C1 Foreign income tax offset

Is the SMSF entitled to a foreign income tax offset?

  • No – Leave label C1 blank. Go to label C2.
  • Yes – Read on.

The SMSF may be able to claim a foreign income tax offset where it has paid foreign income tax on an amount included in its assessable income. The SMSF’s foreign income tax offset is limited to the lesser of:

  • the foreign income tax that the SMSF paid (or is taken to have paid)
  • the SMSF's foreign income tax offset limit (which is $1,000 or the amount calculated under paragraph 770-75(2)(b) of the ITAA 1997, whichever is greater).

Write at label C1 the amount that the SMSF can claim as a foreign income tax offset.

Don't include Australian franking credits from a New Zealand company at label C1. Include these at either label:

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

For more information, see:

C2 Rebates and tax offsets

Is the SMSF entitled to rebates and tax offsets (other than those that the SMSF claims at labels C1, D1 to D4 or E1 to E4)?

  • No – Leave label C2 blank. Go to label C.
  • Yes – Read on.

Write at label C2 the total of rebates and tax offsets available other than those that are included at labels C1, D1 to D4 or E1 to E4.

Include franking credits tax offsets at label C2 if the SMSF is non-complying. For details on entitlement to a franking credits tax offset, see Entitlement to franking credits tax offset.

You must also include the franking credit as income at the appropriate question in Section B.

Don't include:

  • franking credits tax offsets if the SMSF is complying (include these at label E1 Complying fund’s franking credits tax offset)
  • no-TFN tax offsets (include these at label E2 No-TFN tax offset)
  • franking credits attributable to a dividend that is excluded from assessable income because family trust distribution tax has been paid
  • franking credits tax offsets for foreign (including New Zealand) imputation credits (the SMSF can't claim these in Australia)
  • early stage venture capital limited partnership tax offset – include these at  
    • label D1 Early stage venture capital limited partnership tax offset, and/or
    • label D2 Early stage venture capital limited partnership tax offset carried forward from previous year)
  • early stage investor tax offset – include these at  
    • label D3 Early stage investor tax offset, and/or
    • label D4 Early stage investor tax offset carried forward from previous year).

For more information, see Subsection 67-25(1A) and Division 207 of the Income Tax Assessment Act 1997.

C Non-refundable non-carry forward tax offsets

Write at label C the total of labels C1 Foreign income tax offset and C2 Rebates and tax offsets.

If you didn't write an amount at labels C1 or C2, leave label C blank.

T2 Subtotal 1

Subtract the amount at label C Non-refundable non-carry forward tax offsets from label B Gross tax.

If the answer is:

  • positive, write the answer at label T2
  • zero or negative, write 0 (zero) at label T2.

If the non-refundable non-carry forward tax offsets are greater than the gross tax, the excess cannot be carried forward and is lost.

Example: calculating T2 SUBTOTAL 1 (non-refundable non-carry forward tax offsets greater than gross tax)

SMSF T2 is a complying SMSF with excess non-refundable non-carry forward tax offsets. It writes the following amounts in its SMSF annual return:

Calculation of T2 Subtotal 1 (offsets greater than gross tax)

Section D: Income tax calculation statement

Amount used
in calculation
$

B Gross tax

2,000

C Non-refundable non-carry forward tax offsets

2,500

T2 Subtotal 1

0

SMSF T2 has more non-refundable non-carry forward tax offsets ($2,500) than gross tax ($2,000).

SMSF T2 uses its non-refundable non-carry forward tax offsets of $2,000 to reduce its gross tax to $0 at label T2 Subtotal 1.

It loses the remaining non-refundable non-carry forward tax offsets ($500).

End of example

 

Example: calculating T2 SUBTOTAL 1 (non-refundable non-carry forward tax offsets less than gross tax)

SMSF T2 is a complying SMSF. Its non-refundable non-carry forward tax offsets are less than its gross tax. It writes the following amounts in its SMSF annual return:

Calculation of T2 Subtotal 1 (offsets less than gross tax)

Section D: Income tax calculation statement

Amount used
in calculation
$

B Gross tax

2,175

C Non-refundable non-carry forward tax offsets

675

T2 Subtotal 1

1,500

SMSF T2 uses its $675 non-refundable non-carry forward tax offsets against its $2,175 gross tax. The amount it enters at label T2 Subtotal 1 is $1,500 ($2,175 − $675).

End of example

D1, D2, D3, D4, D Non-refundable carry forward tax offsets

Non-refundable carry forward tax offsets reduce any remaining tax at label T2 Subtotal 1.

If the total of the non-refundable carry forward tax offsets at label D is greater than the remaining tax at label T2, the excess may be carried forward to a future income year.

If the amount at label T2 is greater than the total of the non-refundable carry forward tax offsets at label D, the remaining tax is shown at label T3 Subtotal 2.

Write at label D the total of labels:

  • D1 Early stage venture capital limited partnership tax offset
  • D2 Early stage venture capital limited partnership tax offset carried forward from previous year
  • D3 Early stage investor tax offset, and
  • D4 Early stage investor tax offset carried forward from previous year.

If you didn't write an amount at labels D1, D2, D3 or D4, leave label D blank.

The tax offsets shown at label D are not refundable.

D1, D2 Early stage venture capital limited partnership tax offset

An SMSF may be able to claim the early stage venture capital limited partnership (ESVCLP) tax offset if one or both of the following applies:

  • it is entitled to the ESVCLP tax offset in 2023–24
  • it has an amount of unused ESVCLP tax offset carried forward from a previous year.

D1 Early stage venture capital limited partnership tax offset

Is the SMSF entitled to claim an ESVCLP tax offset for contributions made during 2023–24?

  • No – Leave label D1 blank. Go to label D2.
  • Yes – Read on.

The SMSF's 2023–24 ESVCLP tax offset is the total of its tax offsets based on the SMSF's contributions to the ESVCLP as either:

  • a limited partner of the ESVCLP
  • through a partnership or a trust.

The ESVCLP must have become unconditionally registered on or after 7 December 2015.

If the SMSF is a limited partner of an ESVCLP, the SMSF's tax offset is limited to 10% of the lesser of the following:

  • the SMSF's total contributions to the ESVCLP during 2023–24 (certain exclusions apply)
  • the SMSF's share (based on the SMSF's interest in the entire capital of the ESVCLP at the end of the current income year) of the sum of eligible venture capital investments made by the ESVCLP during the period starting at the start of the current income year and ending 2 months after the end of the current income year.

If the SMSF is a partner in a partnership or a beneficiary of a trust which has contributed to an ESVCLP, the SMSF may be entitled to an amount of ESVCLP tax offset. A written notification will be provided by the partnership or trustee of the trust setting out the SMSF's entitlement to this tax offset. If a written notification has not been provided, contact the partnership or the trustee.

Write the total amount of the 2023–24 ESVCLP tax offset at label D1.

For more information on the ESVCLP tax offset and the eligibility requirements, see ESVCLP tax incentives and concessions.

D2 Early stage venture capital limited partnership tax offset carried forward from previous year

Does the SMSF have an amount of unused ESVCLP tax offset carried forward from a previous year?

  • No – Leave label D2 blank. Go to label D3.
  • Yes – Read on.

To work out whether the SMSF can carry forward an amount of ESVCLP tax offset from a previous year to 2023–24, see Division 65 of the ITAA 1997.

The unused ESVCLP tax offset carried forward from a previous year may need to be adjusted for any net exempt income.

The unused ESVCLP tax offset carried forward from a previous year is reduced by 30 cents for every dollar of unused net exempt income, provided the SMSF had taxable income for that year.

Write at label D2 the amount of unused ESVCLP tax offset carried forward from the previous year, less any reductions, if applicable.

For more information, see:

D3, D4 Early stage investor tax offset

An SMSF may be entitled to the early stage investor tax offset for the income year if the fund either:

  • invested in an early stage innovation company during the year
  • has an amount of unused early stage investor tax offset carried forward from a previous year.

The maximum offset (including current year and carried forward prior year amounts) that the fund, and its affiliates combined, can claim in 2023–24 is $200,000.

D3 Early stage investor tax offset

Is the SMSF entitled to claim an early stage investor tax offset in 2023–24?

  • No – Leave label D3 blank. Go to label D4.
  • Yes – Read on.

Steps to calculate the early stage investor tax offset

Step 1: Work out the total amount the SMSF paid for eligible shares in early stage innovation companies in 2023–24.

If the requirements of the 'sophisticated investor' test under the Corporations Act 2001 are not met for at least one of the investments in an early stage innovation company during 2023–24 the step 1 amount must not exceed $50,000. If the step 1 amount exceeds $50,000 the SMSF can't claim this offset.

Step 2: Multiply the step 1 amount by 20%.

Step 3: Identify the SMSF's entitlements to any early stage investor tax offsets as a beneficiary of a trust or a partner in a partnership that has invested in an early stage innovation company in 2023–24.

If the SMSF is a partner in a partnership or a beneficiary of a trust which has invested in an early stage innovation company during 2023–24, the SMSF may be entitled to an early stage investor tax offset. A written notification will be provided by the partnership or trustee of the trust setting out the SMSF's entitlement to this tax offset. If a written notification has not been provided, contact the partnership or the trustee.

Step 4: Add together the amounts at step 2 and step 3. This is the step 4 amount.

Step 5: Subtract from $200,000 the amount (if any) reported at label D4 Early stage investor tax offset carried forward from previous year. This result is the step 5 amount.

Step 6: If the step 4 amount is equal to or less than the step 5 amount, write the step 4 amount at label D3.

If the step 4 amount is greater than the step 5 amount, write the step 5 amount at label D3.

The amount reported at label D3 may need to be further reduced if any of the SMSF’s affiliates are entitled to the early stage investor tax offset (whether for investments they made in 2023–24 or carried forward from a previous year).

The maximum offset (including current year and carried forward prior year amounts) that the SMSF, and its affiliates combined, can claim in 2023–24 is $200,000.

D4 Early stage investor tax offset carried forward from previous year

Does the SMSF have an amount of unused early stage investor tax offset carried forward from a previous year?

  • No – Leave label D4 blank. Go to label D.
  • Yes – Read on.

To work out whether the SMSF can carry forward an amount of the early stage investor tax offset from a previous year to 2023–24, see Division 65 of the Income Tax Assessment Act 1997.

The unused early stage investor offset carried forward from a previous year may need to be adjusted for any net exempt income.

The unused early stage investor tax offset carried forward from a previous year is reduced by 30c for every dollar of unused net exempt income, provided the SMSF had taxable income for that year.

Write at label D4 the amount of unused early stage investor tax offset carried forward from the previous year, less any reductions, if applicable.

Example: calculating early stage investor tax offset

The Retiresoon SMSF has a carried forward early stage investor tax offset of $60,000 from 2022–23.

In 2023–24, the Retiresoon SMSF invested $500,000 in eligible shares in one early stage innovation company, and $250,000 in another. The Retiresoon SMSF meets the requirements of the sophisticated investor test.

The Retiresoon SMSF has gross tax of $180,000 at label B, no amounts at label C (non-refundable non-carry forward offsets) and no exempt income.

The amount that the Retiresoon SMSF writes at label D4 is $60,000. It calculates the amount reported at label D3 as:

Step 1: The total amount paid for eligible shares the early stage innovation companies in 2022–23 = $750,000.

Step 2: Multiply step 1 amount ($750,000) by 20% = $150,000.

Step 3: Nil – The Retiresoon SMSF has no early stage investor entitlements via trusts or partnerships.

Step 4: The Retiresoon SMSF adds the amounts from steps 2 and 3. The result is $150,000.

Step 5: The Retiresoon SMSF subtracts the amount at label D4, $60,000, from $200,000. The result is $140,000.

Step 6: As the step 4 amount ($150,000) is greater than the step 5 amount ($140,000), the Retiresoon SMSF writes $140,000 at label D3.

The Retiresoon SMSF can claim an early stage investor tax offset equal to the sum of the label D4 and D3 amounts ($60,000 plus $140,000, totalling $200,000). Although the carried forward tax offset from 2022–23 ($60,000) and the current year tax offset of $150,000 (step 4 amount) equals $210,000, the Retiresoon SMSF's total tax offset is capped at $200,000 for 2023–24. The unused excess of $10,000 cannot be carried forward to future income years.

As the Retiresoon SMSF's entitlement to the tax offset ($200,000) is greater than its gross tax payable ($180,000), the unused portion of the offset ($20,000) may be carried forward to future income years (subject to the rules in Division 65).

End of example

For more information on the early stage investor tax offset and the eligibility requirements, see Tax incentives for early stage investors.

For more information, see:

T3 Subtotal 2

Subtract the amount at label D Non-refundable carry forward tax offsets from label T2 Subtotal 1.

If the answer is:

  • positive, write the answer at label T3
  • zero or negative, write 0 (zero) at label T3.

If the non-refundable carry forward tax offsets are greater than the subtotal at label T2, the excess may be carried forward and applied in a later income year.

Example: calculating T3 Subtotal 2
(non-refundable carry forward tax offsets greater than T2 Subtotal 1)

SMSF T3 is a complying SMSF with excess non-refundable carry forward tax offsets. It writes the following amounts in its SMSF annual return:

Calculation of T3 Subtotal (offsets greater than amount at T2 Subtotal 1)

Section D: Income tax calculation statement

Amount used in calculation
$

T2 Subtotal 1

2,000

D Non-refundable carry forward tax offsets

2,500

T3 Subtotal

0

SMSF T3 has more non-refundable carry forward tax offsets ($2,500) than its label T2 Subtotal 1 ($2,000).

SMSF T3 uses its non-refundable carry forward tax offset of $2,000 to reduce its label T2 Subtotal 1 to $0 at label T3 Subtotal. It may carry forward the remaining non-refundable carry forward tax offset ($500) to the next income year.

End of example

 

Example: calculating T3 Subtotal
(non-refundable carry forward tax offsets less than amount at T2 Subtotal 1)

SMSF T3 is a complying SMSF. Its non-refundable carry forward tax offsets are less than its label T2 Subtotal 1. It writes the following amounts in its SMSF annual return.

Calculation of T3 Subtotal (offsets less than amount at T2 Subtotal 1)

Section D: Income tax calculation statement

Amount used in calculation
$

T2 Subtotal 1

2,175

D Non-refundable carry forward tax offsets

675

T3 Subtotal

1,500

SMSF T3 uses its $675 non-refundable carry forward tax offsets against its $2,175 label T2 Subtotal 1. The amount it enters at label T3 Subtotal is $1,500 ($2,175 − $675).

End of example

E1, E2, E3 E4 and E Refundable tax offsets questions

If the SMSF is entitled to any refundable tax offsets, the offsets reduce any remaining tax at label T3 Subtotal.

If the amount of refundable tax offsets exceeds the remaining tax at label T3, show the excess at label I Tax offset refunds.

If the amount of refundable tax offsets is less than the remaining tax at label T3 the shortfall becomes the tax payable amount at label T5.

E1 Complying fund’s franking credits tax offset

For details on entitlement to a franking credits tax offset, see Entitlement to franking credits tax offset.

Is the SMSF entitled to a complying fund's franking credits tax offset?

  • No – Leave label E1 blank. Go to label E2.
  • Yes – Read on.

Write the franking credits tax offsets at label E1.

You must also include the franking credits as income at the appropriate question in Section B.

Include at label E1 Australian franking credits that are attached to:

  • dividends and non-share dividends including where they are exempt current pension income
  • a New Zealand franking company's  
    • franked non-share dividends, and
    • assessable franked dividends.

Don't include:

  • franking credits if the SMSF is non-complying (include these at label C2 rebates and tax offsets)
  • credits that you included at label C1 Foreign income tax offset
  • franking credits attributable to a dividend that is excluded from assessable income because family trust distribution tax has been paid
  • New Zealand imputation credits (an Australian resident can't claim New Zealand imputation credits).

For more information, see Section 67-25 and Division 207 of the Income Tax Assessment Act 1997.

E2 No-TFN tax offset

An SMSF is entitled to a no-TFN tax offset in 2023–24 if:

  • it was required to pay extra tax on no-TFN-quoted contributions in any of the previous 3 income years, and
  • the no-TFN-quoted contributions were for a member who gave their TFN to the SMSF for the first time in 2023–24.

Is the SMSF entitled to a no-TFN tax offset?

  • No – Leave label E2 blank. Go to label E3.
  • Yes – Read on.

Write the no-TFN tax offset at label E2.

The amount of no-TFN tax offset that the SMSF can claim is the total of the additional no-TFN-quoted contributions tax (see J Tax on no-TFN-quoted contributions) that the SMSF was required to pay:

  • in any of the 3 previous income years
  • for members who gave their TFN to the SMSF for the first time in 2023–24.

Because SMSF members are generally either trustees of the SMSF, or directors of a corporate trustee, it is very rare for an SMSF to pay no-TFN-quoted contributions tax, and therefore very rare for SMSFs to be entitled to a no-TFN tax offset. Penalties may apply if you claim a no-TFN tax offset that the SMSF is not entitled to.

For more information, see Section 67-23 and Subdivision 295-J of the Income Tax Assessment Act 1997.

Example: entitlement to a no-TFN tax offset

SMSF E2 received $10,000 assessable contributions for Julie, a member, during 2022–23. Julie had not provided the SMSF with her TFN by 30 June 2023. In the SMSF 2022–23 annual return the SMSF reported Julie's $10,000 contribution as a no-TFN-quoted contribution. It paid additional tax of $3,400 on the no-TFN-quoted contributions.

Julie provided her TFN to SMSF E2 on 30 September 2023.

SMSF E2 is entitled to claim a no-TFN tax offset for the additional no-TFN-quoted contributions tax of $3,400 paid for 2022–23.

SMSF E2 writes $3,400 at label E2 No-TFN tax offset in its 2023–24 annual return.

End of example

E3 National rental affordability scheme tax offset

Is the SMSF entitled to a national rental affordability scheme (NRAS) tax offset?

  • No – Leave label E3 blank. Go to label E4.
  • Yes – Read on.

Write the NRAS tax offset at label E3.

The refundable tax offset is only available when the Secretary of the Department of Social Services has issued a certificate under the NRAS. In order to claim the tax offset in the 2023–24 SMSF annual return, the NRAS certificate must relate to the NRAS year 1 May 2023 to 30 April 2024.

For more information, see:

E4 Exploration credit tax offset

Is the SMSF entitled to an exploration credit tax offset?

  • No – Leave label E4 blank. Go to label E.
  • Yes – Read on.

Write the exploration credit tax offset at label E4.

An SMSF may be entitled to a tax offset for exploration credits received during the income year if it was an Australian resident for the whole of the income year.

The amount of the tax offset is the total value of exploration credits the SMSF received in the income year. However, special rules may apply where the SMSF has received exploration credits from a partnership or a trust.

For more information, see:

E Refundable tax offsets

Write at label E the total of labels:

  • E1 Complying fund's franking credits tax offset
  • E2 No-TFN tax offset
  • E3 National rental affordability scheme tax offset
  • E4 Exploration credit tax offset.

The tax offsets reduce the tax that remains at label T3 Subtotal. If the amount of refundable tax offsets at label E:

  • is less than the tax at label T3, the shortfall becomes the SMSF's tax payable amount at label T5 Tax payable
  • is greater than the tax at label T3, show the excess at label I Tax offset refunds.

T5 Tax payable

Label T5 is mandatory. If you leave label T5 blank, you will have specified a zero amount.

Is the amount at T3 Subtotal more than the amount at E Refundable tax offsets?

  • No – Write 0 (zero) at label T5.

    Subtract the amount at label T3 Subtotal from label E Refundable tax offsets.

    Write the result at label I Tax offset refunds.
  • Yes – Subtract the amount at label E Refundable tax offsets from label T3 Subtotal.

    Write the result at label T5.

 

Example: calculating T5 Tax payable (refundable tax offsets less than T3)

SMSF T5 has no excess refundable tax offsets. It writes the following amounts in its SMSF annual return:

Calculation of T5 Tax payable (refundable offsets less than T3)
Calculation of T5 Tax payable (refundable offsets less than T3)

Section D: Income tax calculation statement

Amount used in calculation
$

T3 Subtotal

1,500

E Refundable tax offsets

500

T5 Tax payable

1,000

I Tax offset refunds

0

SMSF T5 subtracts the $500 refundable tax offsets from its label T3 Subtotal of $1,500. The amount at label T5 Tax payable is $1,000 (that is, $1,500 − $500).

End of example

 

Example: calculating T5 Tax payable (refundable tax offsets greater than T3)

SMSF T5 writes the following amounts in its SMSF annual return:

Calculation of T5 Tax payable (refundable offsets greater than T3)
Calculation of T5 Tax payable (refundable offsets greater than T3)

Section D: Income tax calculation statement

Amount used in calculation
$

T3 Subtotal

1,500

E Refundable tax offsets

2,000

T5 Tax payable

0

I Tax offset refunds

500

SMSF T5 has more refundable tax offsets ($2,000) than tax (label T3 Subtotal $1,500).

SMSF T5 uses the refundable tax offsets of $2,000 to reduce the tax to $0, which it writes at label T5 Tax payable.

SMSF T5 writes the remaining refundable tax offset ($500) at label I Tax offset refunds and this is available as a credit amount in the overall calculation.

End of example

G Section 102AAM interest charge

An interest charge is imposed on certain distributions from non-resident trusts under Section 102AAM of the Income Tax Assessment Act 1936.

Is the SMSF required to pay a Section 102AAM interest charge?

  • No – Leave label G blank.
  • Yes – Write at label G the Section 102AAM interest charge that the SMSF is required to pay.

H2, H3, H5, H6, H8 and H Eligible credit questions

If the SMSF is entitled to any credits for tax or TFN amounts withheld or for interest, the total eligible credits are available as a credit amount in the overall calculation. If the amount of eligible credits exceeds the tax payable and the levy amount then the SMSF may be entitled to a refund of the excess.

H2 Credit for tax withheld – foreign resident withholding

Is the SMSF entitled to a credit for tax withheld through foreign resident withholding in Australia?

  • No – Leave label H2 blank. Go to label H3.
  • Yes – Read on.

Don't include credits for amounts withheld from foreign resident capital gains withholding at label H2. Include these at label H8 Credit for amounts withheld from foreign resident capital gains withholding.

Write at label H2 the total amount of tax withheld from payments to the SMSF that were subject to foreign resident withholding in Australia. Include at label H2 the SMSF’s share of foreign resident withholding credits distributed to the SMSF from a partnership or included in a share of net income from a trust.

If a payer has withheld tax for foreign resident withholding from a payment to the SMSF, the payer must give the SMSF a payment summary that shows how much the payer withheld from its payments to the SMSF.

If you claim a credit at label H2:

The SMSF is entitled to a credit at label H2 only if the amount was both:

  • withheld in Australia
  • remitted to us.

For more information, see PAYG withholding.

H3 Credit for tax withheld – where ABN or TFN not quoted (non-individual)

Is the SMSF entitled to credits for tax withheld where it didn't quote its Australian business number (ABN) or tax file number (TFN)?

  • No – Leave label H3 blank. Go to label H5.
  • Yes – Read on.

Write at label H3 the total tax withheld from payments to the SMSF because the SMSF had not quoted its ABN or TFN.

If a payer has withheld tax from a payment to the SMSF because the SMSF didn't quote its ABN or TFN, the payer must give the SMSF a payment summary that shows how much tax was withheld.

Don't include at label H3:

  • contributions that the SMSF received for a member who has not quoted their TFN (include these at Section B, item 11 – label R3 No-TFN-quoted contributions)
  • amounts withheld from payments because the SMSF did not provide its TFN to the trustee of a closely held trust (include these at label H5).

If you claim a credit at label H3:

For more information, see PAYG withholding.

H5 Credit for TFN amounts withheld from payments from closely held trusts

Is the SMSF entitled to credits for TFN amounts withheld from payments from closely held trusts?

  • No – Leave label H5 blank. Go to label H6.
  • Yes – Read on.

Write at label H5 the total tax withheld from payments where the SMSF has not provided its TFN to the trustee of a closely held trust and the payment is subject to the TFN withholding rules.

If a closely held trust has withheld tax from a payment to the SMSF because the SMSF didn't provide its TFN, the closely held trust must give the SMSF a payment summary that specifies how much it withheld from its payments to the SMSF.

If you claim a credit at label H5:

For more information, see TFN withholding for closely held trusts.

H6 Credit for interest on no-TFN tax offset

Is the SMSF entitled to interest on no-TFN tax offsets?

If the SMSF has not claimed a no-TFN tax offset at label E2, it can't claim a credit at label H6.

  • No – Leave label H6 blank. Go to label H8.
  • Yes – Read on.

Write at label H6 the total calculated interest amount of 50c or more for interest payable on the no-TFN tax offset claimed at label E2 No-TFN tax offset. Don't include no-TFN tax offsets at label H6 (include these offsets at label E2 No-TFN tax offset).

Interest on the no-TFN tax offset is only payable if all the following occurred:

  • the member of the SMSF provided their TFN to their employer before the end of a past income year
  • the employer was required by Section 299C of the Superannuation Industry (Supervision) Act 1993 (SISA) to inform the SMSF of the individual’s TFN by the end of the year, but did not do so
  • contributions made for that member were no-TFN-quoted contributions in that past income year and the SMSF was required to pay additional tax (which is the interest bearing tax) on those contributions
  • the SMSF claimed a no-TFN tax offset in 2023–24 for the additional tax paid on those no-TFN-quoted contributions in a past income year
  • the no-TFN tax offset is applied when assessing the SMSF for 2023–24.

The rate of interest payable on the interest-bearing tax is the base interest rate determined under Section 8AAD of the Taxation Administration Act 1953 (TAA).

Keep a record of the amount of interest payable on tax that counts towards the no-TFN tax offset. This interest is assessable income of the SMSF in the income year in which it is paid to the SMSF or credited against another SMSF liability.

For more information, see Interest on no-TFN quoted tax offset.

H8 Credit for amounts withheld from foreign resident capital gains withholding

Is the SMSF entitled to a credit for tax withheld through foreign resident capital gains withholding in Australia?

  • No – Leave label H8 blank. Go to label H.
  • Yes – Read on.

Write at label H8 the total amount of tax withheld from payments to the SMSF that were subject to foreign resident capital gains withholding in Australia. Include at label H8 the SMSF’s share of foreign resident capital gains withholding credits distributed to the SMSF from its share of net income from a trust.

You should only claim at label H8 a credit equal to the amount of foreign resident capital gains withholding paid by a purchaser to the ATO on your behalf. The ATO would have issued you with confirmation of this amount.

Don't include credits for amounts withheld from foreign resident withholding at label H8. Include these at label H2 Credit for tax withheld – foreign resident withholding.

For more information, see Capital gains withholding: Impacts on foreign and Australian residents.

H Eligible credits

Is there an amount at label:

  • H2 Credit for tax withheld – foreign resident withholding
  • H3 Credit for tax withheld – where ABN or TFN not quoted (non-individual)
  • H5 Credit for TFN amounts withheld from payments from closely held trusts
  • H6 Credit for interest on no-TFN tax offset
  • H8 Credit for amounts withheld from foreign resident capital gains withholding?

If you answered:

  • No – Leave label H blank.
  • Yes – Write at label H the total of the amounts at labels H2, H3, H5, H6 and H8.

I Tax offset refunds

Is the amount at T3 Subtotal less than the amount at E Refundable tax offsets?

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

Subtract the amount at label T3 Subtotal from label E Refundable tax offsets. Write the result at label I.

See the examples at T5 Tax payable showing the calculation of label I Tax offset refunds.

Label T5 is mandatory. If you leave label T5 blank, you will have specified a zero amount.

K PAYG instalments raised

Did the SMSF pay, or was it required to pay, PAYG instalments for 2023–24?

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

Write at label K the total of the SMSF’s PAYG instalments for 2023–24, whether or not the PAYG instalments have actually been paid.

You can find the SMSF's PAYG instalment amounts on its activity statements.

If the SMSF used the instalment amounts worked out by us, its PAYG instalment amounts were pre-printed at either label:

  • T7 on the SMSF’s quarterly activity statements
  • T5 on the annual instalment activity statement.

If the SMSF didn't use the instalment amounts worked out by us, work out its PAYG instalment amounts by subtracting the credits claimed at label 5B from the amounts reported at label 5A on its activity statements.

To ensure the SMSF receives the correct amount of credit for its PAYG instalments, make sure all of its activity statements are finalised before lodging the annual return. If the SMSF is required to lodge its activity statements, it should do so even if it can’t pay on time, or has nothing to pay.

The SMSF is entitled to a credit for its PAYG instalments even if it has not actually paid a particular instalment. However, the SMSF will be liable for the general interest charge on any outstanding instalment for the period from the due date for that instalment until the date it is fully paid.

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 if you use the instalment rate method to calculate your SMSF's PAYG instalments. See PAYG instalments.

L, M and N Supervisory levy

Labels L, M and N are used to calculate the amount of SMSF supervisory levy that the SMSF must pay with the 2024 SMSF annual return. The amount that you must write at each of these items depends on whether the SMSF was:

  • an existing SMSF at the start of 2023–24 and was not wound up in 2023–24
  • a newly registered SMSF in 2023–24 and its first SMSF annual return is for 2023–24
  • wound up during 2023–24
  • both newly registered and wound up during 2023–24.

Table 9 shows the amounts you must write at labels M and N. Label L is already completed.

Table 9: Supervisory levy amounts

Type of SMSF

Amount
at L
$

Amount
at M
$

Amount
at N
$

Net amount
(L−M+N)
$

Comment

Existing SMSF that was not wound up in 2023–24

259

0 or blank

0 or blank

259

The SMSF supervisory levy amount is for 2024–25.

Newly registered SMSF in 2023–24 that was not wound up in 2023–24

259

0 or blank

259

518

The SMSF supervisory levy amount is for 2023–24 and 2024–25.

Newly registered SMSF in 2023–24 that was wound up in 2023–24

259

0 or blank

0 or blank

259

The SMSF supervisory levy amount is for 2023–24.

Existing SMSF that was wound up in 2023–24

259

259

0 or blank

0

No SMSF supervisory levy is due.

L Supervisory levy

Label L shows the amount of supervisory levy due for 2024–25 ($259). Don't change the amount printed on the annual return.

The supervisory levy is included in the SMSF’s tax assessment calculation and is to be paid with its income tax liability. The levy is payable even if the SMSF has no tax liability 2023–24.

For more information, see Superannuation (Self-Managed Superannuation Funds) Supervisory Levy Imposition Act 1991External Link.

M Supervisory levy adjustment for wound up funds

Was the SMSF wound up in 2023–24?

  • No – Leave label M blank. Go to label N.
  • Yes – Write $259.00 at label M. Make sure you answered Yes in Section A, item 9 Was the fund wound up during the income year?

An SMSF which was wound up during 2023–24 does not pay the SMSF supervisory levy for 2024–25. Writing $259 at label M reduces the levy payable by $259 since the amount that you write at label M will be subtracted when you calculate label S Amount due or refundable.

N Supervisory levy adjustment for new funds

Is this the first annual return for a newly registered SMSF?

  • No – Leave label N blank. Go to label S.
  • Yes – Write $259.00 at label N. Make sure you answered Yes to Section A, item 5 – label B Is this the first required return for a newly registered SMSF?

The amount at label N is the SMSF supervisory levy for 2023–24. SMSFs that are lodging their first annual return have not paid this amount previously while the other SMSFs paid the SMSF supervisory levy for 2023–24 with their 2023 SMSF annual return.

For more information, see SMSF supervisory levy.

S Amount due or refundable

To work out label S:

  • add labels  
    • T5 Tax payable
    • G Section 102AAM interest charge
    • L Supervisory levy
    • N Supervisory levy adjustment for new funds
  • and then subtract labels  
    • H Eligible credits
    • I Tax offset refunds
    • K PAYG instalments raised
    • M Supervisory levy adjustment for wound up funds.

Label S Amount due or refundable can be zero, positive or negative:

  • a positive amount is what you must pay to us
  • a negative amount is the refund that you will receive.

If the amount at label S is negative, write a minus sign (−) to the left of the amount that you printed at label S.

If the amount at label S is negative, complete Section A, item 7 Electronic funds transfer (EFT) to receive the refund.

If the SMSF has made any interim or voluntary payments against its 2023–24 tax liability:

  • don't take the payments into account when working out the amount at label S
  • take the payments into account when working out the amount you must pay to us.

Don't attach any payment to the annual return. For more information, see Payment.

Record keeping

The SMSF must keep:

  • all documentation issued by financial institutions detailing  
    • payments of income
    • any TFN amounts deducted from those payments
  • details of any TFN amounts deducted from the SMSF's income payments and subsequently refunded to the SMSF by the financial institution.

Where an amount is refunded the SMSF must keep details of the:

  • amount of refund
  • date of refund
  • investment reference number, for example, the bank account number of the investment relating to the refund.

Continue to: Section E: Losses – item 14

Return to: Instructions to complete your SMSF annual return 2024

 

QC101714