Support Query
The fund is in 100% pension phase. why is there still assessable income appearing in the tax return?
Possible Issues/Solutions
1. The fund is not treated as 100% Pension Phase
To learn how to input Pension Policy to treat the fund as 100% pension phase, please refer to How to treat a 100% Pension Fund in Simple Fund 360
2. Deferred Notional Gain
The fund has processed a capital gain that was previously deferred under transitional CGT relief for superannuation funds. These gains are considered by the system as assessable income due to ATO requirements.
As per an extract from the ATO
Extract taken from ATO 2023 Annual Return Instructions - Section B: Income – item 11.
To determine if the fund has any notional gains, refer to the fund's Realised Capital Gains Report.
3. Assessable Contributions
Contributions with assessable components will be included in the fund's taxable income.
In situations where a member has received assessable contributions in the financial year, there will be a taxable amount despite the fund being in full pension. Furthermore, this is further explained by the ATO.
"When calculating the amount of ordinary income and statutory income of the SMSF that is exempt from income tax, non-arms length income and assessable contributions are excluded from the calculation."
Extract from ATO, Non-arms length income and assessable income.
In situations where a member has received assessable contributions in the financial year, there will be a taxable amount despite the fund being in full pension. Furthermore, this is further explained by the ATO.
"When calculating the amount of ordinary income and statutory income of the SMSF that is exempt from income tax, non-arms length income and assessable contributions are excluded from the calculation."
Extract from ATO, Non-arms length income and assessable income.