SMSF examples
The examples are based on the following background information:
- The SMSF has a range of investments, mainly Australian shares and managed funds. The portfolio is regularly revised to ensure the fund isn't overweight in any particular share or fund, due to uneven price movement on the ASX – this results in some capital gains and capital losses, and there are capital gain distributions from the managed funds themselves.
- The SMSF has 2 members. As at the start of the financial year, they have fifty-fifty ownership of the assets.
- The SMSF received $35,000 in dividends, with franking credits of $15,000 from each of the 4 companies invested in, for a total of $200,000.
- The SMSF earned interest of $200; ordinary trust income of $20,000, with imputation credits of $2,000 from their managed funds; foreign income of $10,000, with a foreign tax credit of $500; and capital gains, all discount, of $4,000:
- The total income of the fund was $234,200.
- The expenses are negligible and can be ignored.
- The tax payable, prima facie, is $35,130.
The following additional assumptions are made in relation to these examples:
- The fund has all necessary actuarial certificates where required; for example, where the proportionate method is used. These certificates show a 50% split of income (if the percentage shown on the certificate was different, the calculations in the examples would need to be adjusted to reflect the percentage shown on the certificate).
- There was no non-arm's length income.
- There were no contributions.
- The pensions met all the requirements under the Superannuation Industry (Supervision) Act 1993External Link.
The examples show the calculation of taxable income or loss and the amount due or refundable where only some of the assets of an SMSF are held to support retirement-phase income streams.
Example: assumes the assets aren't segregated
The fund has 2 members who have met their preservation age but are not yet 60. One draws a pension of $36,000 from 1 July; the other is still in accumulation phase within the fund. The assets are not segregated.
This would be shown on the SMSF annual return as follows.
|
Field |
Value |
|---|---|
|
Net capital gain (label A) |
$4,000 |
|
Gross interest (label C) |
$200 |
|
Net foreign income (label D) |
$10,000 |
|
Franked dividend amount (label K) |
$140,000 |
|
Dividend franking credit (label L) |
$60,000 |
|
Gross trust distributions (label M) |
$20,000 |
|
Assessable contributions (label R) |
$0 |
|
Gross income (label W) |
$234,200 |
|
Exempt current pension income (label Y) |
$117,100 |
|
Total assessable income (label V) |
$117,100 |
|
Field |
Value |
|---|---|
|
Taxable income (label A) |
$117,100 |
|
Tax on Taxable income (label T1) |
$17,565 |
|
Tax on no-TFN-quoted contributions (label J) |
$0 |
|
Gross tax (label B) |
$17,565 |
|
Subtotal 1 (label T2) |
$17,565 |
|
Subtotal 2 (label T3) |
$17,565 |
|
Complying fund's franking credits tax offset (label E1) |
$62,000 |
|
Refundable tax offsets (label E) |
$62,000 |
|
Tax payable (label T5) |
$0 |
|
Tax offset refunds (label I) |
$44,435 |
|
Supervisory levy (label L) |
$259 |
|
Amount due or refundable (label S) |
$44,176
|
You should also include ECPI in Section A label 10A of the SMSF annual return.
End of example
Example: assumes the assets are segregated
The fund has 2 members who have met their preservation age but are not yet 60. One draws a pension of $36,000 from 1 July, and the other is still in accumulation phase within the fund.
The assets are segregated. The pensioner is assigned all the shares, and the non-pensioner has all the other assets (as the pension member has all share assets segregated to provide for their benefit, it's assumed the value of the remaining assets is equal to this amount).
This would be shown on the SMSF annual return as follows.
|
Field |
Value |
|---|---|
|
Net capital gain (label A) |
$4,000 |
|
Gross interest (label C) |
$200 |
|
Net foreign income (label D) |
$10,000 |
|
Franked dividend amount (label K) |
$140,000 |
|
Dividend franking credit (label L) |
$60,000 |
|
Gross trust distributions (label M) |
$20,000 |
|
Assessable contributions (label R) |
$0 |
|
Gross income (label W) |
$234,200 |
|
Exempt current pension income (label Y) |
$200,000 |
|
Total assessable income (label V) |
$34,200 |
|
Field |
Value |
|---|---|
|
Taxable income (label A) |
$34,200 |
|
Tax on Taxable income (label T1) |
$5,130 |
|
Tax on no-TFN-quoted contributions (label J) |
$0 |
|
Gross tax (label B) |
$5,130 |
|
Subtotal 1 (label T2) |
$5,130 |
|
Subtotal 2 (label T3) |
$5,130 |
|
Complying fund's franking credits tax offset (label E1) |
$62,000 |
|
Refundable tax offsets (label E) |
$62,000 |
|
Tax payable (label T5) |
$0 |
|
Tax offset refunds (label I) |
$56,870 |
|
Supervisory levy (label L) |
$259 |
|
Amount due or refundable (label S) |
$56,611
|
You should also include ECPI in Section A label 10A of the SMSF annual return.
End of example
Example: assumes the assets aren't segregated and the fund paid a pension for part of the year
This example uses the same 2 members as previous examples. However, in this case, the pension started on 1 October. We assume the 2 dividend payments are for equal amounts ($100,000 before 30 September and $100,000 after this date).
The assets aren't segregated. Some shares were sold in November to provide cash for the pension, and a capital gain of $10,000, discountable, was made. The managed fund conceded that its capital gains were all made in the last month of the reporting period (June).
The income for this example will be different to that in the first 2 examples, due to the additional $10,000 capital gain realised.
The SMSF will show the following amounts at the specified labels on the SMSF annual return.
This would be shown on the SMSF annual return as follows:
|
Field |
Value |
|---|---|
|
Net capital gain (label A) |
$14,000 |
|
Gross interest (label C) |
$200 |
|
Net foreign income (label D) |
$10,000 |
|
Franked dividend amount (label K) |
$140,000 |
|
Dividend franking credit (label L) |
$60,000 |
|
Gross trust distributions (label M) |
$20,000 |
|
Assessable Contributions (label R) |
$0 |
|
Gross income (label W) |
$244,200 |
|
Exempt current pension income (label Y) (see Note 1) |
$91,575 |
|
Total assessable income (label V) |
$152,625 |
|
Field |
Values |
|---|---|
|
Taxable income (label A) |
$152,625 |
|
Tax on taxable income (label T1) |
$22,894 |
|
Tax on no-TFN-quoted contributions (label J) |
$0 |
|
Gross tax (label B) |
$22,894 |
|
Subtotal 1(label T2) |
$22,894 |
|
Subtotal 2 (label T3) |
$22,894 |
|
Complying fund's franking credits tax offset (label E1) |
$62,000 |
|
Refundable tax offsets (label E) |
$62,000 |
|
Tax payable (label T5) |
$0 |
|
Tax offsets refunds (label I) |
$39,106 |
|
Supervisory levy (label L) |
$259 |
|
Total amount due or refundable (label S) |
$38,847
|
You should also include ECPI in Section A label 10A of the SMSF annual return.
Note 1: As the assets are not segregated, the amount shown here is 75% of the ECPI that would be calculated for the pensioner if the pension had been payable for the full year.
If assets in a fund aren't segregated and a member starts an income stream, the ECPI deduction for that year is the amount of income attributable to the pensioner apportioned from the start date of the pension – that is, if the pension started on 1 March, the ECPI deduction would be 25% of the income attributed to the member (assuming no contributions or special income was received).
End of example
Example: assumes the assets are segregated and the fund paid a pension for part of the year
This example is the same as the previous example, except that the assets are segregated.
This would be shown on the SMSF annual return as follows:
|
Field |
Value |
|---|---|
|
Net capital gain (label A) (see Note 2) |
$4,000 |
|
Gross interest (label C) |
$200 |
|
Net foreign income (label D) |
$10,000 |
|
Franked dividend amount (label K) |
$140,000 |
|
Dividend franking credit (label L) |
$60,000 |
|
Gross trust distributions (label M) |
$20,000 |
|
Assessable contributions (label R) |
$0 |
|
Gross income (label W) |
$234,200 |
|
Exempt current pension income (label Y) (see Note 3) |
$100,000 |
|
Total assessable income (label V) |
$134,200 |
|
Field |
Value |
|---|---|
|
Taxable income (label A) |
$134,200 |
|
Tax on taxable income (label T1) |
$20,130 |
|
Tax on no-TFN-quoted contributions (label J) |
$0 |
|
Gross tax (label B) |
$20,130 |
|
Subtotal 1 (label T2) |
$20,130 |
|
Subtotal 2 (label T3) |
$20,130 |
|
Complying fund's franking credits tax offset (label E1) |
$62,000 |
|
Refundable tax offsets (label E) |
$62,000 |
|
Supervisory levy (label L) |
$259 |
|
Total amount due or refundable (label S) |
$41,611
|
You should also include ECPI in Section A label 10A of the SMSF annual return.
Note 2: Where a pension is started with segregated assets, the ECPI deduction is equal to all income attributed to the assets funding the pension.
Note 3: Where the above pension is started part-way through a year, no apportioning of income occurs if the assets are segregated, and the income is all received after the start date.
Where income is received before the start of the pension the income received doesn't form part of the ECPI deduction.
End of example