Section E and the losses schedule
You don't need to complete Section E if the SMSF has no tax losses or capital losses to carry forward to later income years.
In addition to recording losses in Section E, complete a Losses schedule 2024 and attach it to the annual return if the SMSF has either:
- a combined total for tax losses and net capital losses carried forward to later income years of greater than $100,000
- an interest in a controlled foreign company (CFC) that has
- 2023–24 losses greater than $100,000, or
- deducted or carried forward to later income years a loss greater than $100,000.
Don't show cents for any amount you write in this section.
14 Losses
In this section, complete labels:
- U Tax losses carried forward to later income years
- V Net capital losses carried forward to later income years
U Tax losses carried forward to later income years
Does the SMSF have tax losses to be carried forward to later income years?
- No – Leave label U blank. Go to label V.
- Yes – Read on.
Write at label U the total tax losses incurred by the SMSF that are to be carried forward to later income years. The amount is the total of both:
- the SMSF’s tax loss for 2023–24
- the SMSF’s prior year tax losses to the extent that they have not previously been utilised.
The SMSF's 2023–24 net exempt income, if any, is taken into account to calculate the amount of its tax loss for 2023–24.
If the SMSF's 2023–24 net exempt income is greater than the amount by which the SMSF's deductions (not including prior year tax losses) exceed its assessable income in 2023–24, the SMSF's 2023–24 tax loss will be nil and the surplus net exempt income will reduce prior year losses.
If you lodge a Losses schedule 2024, the amount at label U Tax losses carried forward to later income years on that schedule (item 1 in part A) must be the same as the amount at label U, Section E on the annual return.
Don't include:
- a loss at label U if you wrote a positive amount at Section C, item 12 – label O Taxable income or loss
- net capital losses to be carried forward to later income years at label U; include these at label V Net capital losses carried forward to later income years and in the CGT schedule (if a schedule is required)
- losses that relate to non-arm's length income. Losses that relate to non-arm's length income cannot be applied against the SMSF's arm's length income. You should keep a record of losses that relate to non-arm's length income with the SMSF’s tax records.
For more information, see:
Tax losses and record keeping
If the SMSF incurred tax losses, it may need to keep records for longer than 5 years from the date it incurred the losses.
Generally, you can carry forward tax losses indefinitely until they are applied by recoupment. When applied, the loss amount is a figure that is included in the calculation of the SMSF’s taxable income in that year.
It is in the SMSF’s interest to keep records substantiating its 2023–24 losses until the amendment period for the assessment in which the losses are applied has lapsed (in most cases up to 4 years from the date of that assessment).
For more information, see:
- Record-keeping requirements
- Taxation Determination TD 2007/2 Income tax: should a taxpayer who has incurred a tax loss or made a net capital loss for an income year retain records relevant to the ascertainment of that loss only for the record retention period prescribed under income tax law?
V Net capital losses carried forward to later income years
Does the SMSF have net capital losses to carry forward to later income years?
- No – Leave label V blank. Go to sections F and G.
- Yes – Read on.
Write at label V the total of any unapplied net capital losses from collectables and unapplied net capital losses from all other CGT assets and events.
If this item applies to the SMSF you must refer to the Guide to capital gains tax 2024 to complete this item. It also explains the special CGT rules that apply to foreign residents and trustees of foreign trusts.
This information is calculated or transferred from:
- 3B in Table 5 and 3A in Table 9 of the CGT summary worksheet
- label A and B at item 3 of the CGT schedule, if one is required.
You can't include a loss at label V if you wrote an amount at Section B, item 11 – label A Net capital gain.
If the SMSF must lodge a Losses schedule 2024, the amount on that schedule at Part A, item 2 – label V Net capital losses carried forward to later income years must be the same as the amount at label V here on this annual return.
For more information, see Guide to capital gains tax 2024.
Continue to: Sections F and G: Member information and Supplementary member information
Return to: Instructions to complete your SMSF annual return 2024