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Completing labels in the SMSF annual return

Read examples to help you complete the relevant labels in the SMSF annual return.

Last updated 2 July 2024

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.

Section B, Item 11 Income – assumes the assets are not segregated

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

 

Section D, Item 13 Income tax calculation statement – assumes the assets are not segregated

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
(refund)

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.

Section B, Item 11 Income – assumes the assets are segregated

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

Section D, Item 13 Income tax calculation statement – assumes the assets are segregated

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
(refund)

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:

Section B, Item 11 Income (assumes the assets are not segregated and the fund paid a pension for part of the year)

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

Section D, Item 13 Income tax calculation statement (assumes the assets aren't segregated and the fund paid a pension for part of the year)

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
(refund)

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:

Section B, Item 11 Income (assumes the assets are segregated and the fund paid a pension for part of the year)

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

Section D, Item 13 Income tax calculation statement (assumes the assets are segregated and the fund paid a pension for part of the year)

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
(refund)

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

QC21546