There are many reasons as to why an SMSF needs to adjust benefit and tax allocations among the members as well as for the overall fund. Below list some of the common ones:

Adjusting Member Benefit Allocation

1. To prevent a negative member balance - Adjust Member Benefit Allocation - Negative Member's Balance
2. A better reflection of the true share of benefit and tax allocation among the members
3. Segregation or partial segregation based on investment choices
4. Allocating income/expenses based on an agreed fixed percentage, e.g. 50/50.

Adjusting Tax Allocation

1. Reduce provision for income tax for tax credits that are not supported by Class (e.g. National Rental Affordability Scheme tax credits, Exploration Credit tax offset, Early Stage Investor tax offset);
2. Increase provision for income tax for non-complying fund (taxed at 45%);
3. Increase or decrease provision for deferred tax that is not automated by Class.
4. Non-Arm's Length Income (NALI)