Issue

How to reflect Traditional Security losses as a deduction in the SMSF Annual return in Class

Resolution

The following steps will allow you to take up Traditional Security losses allocated to Non-deductible Expense in Annual Return

1. Create a New Income/Expense Type
2. Process a Negative Non-Tax Assessable Event
3. Change the Income/Expense Type
4. Process a Positive Tax Assessable Event
5. Match the two Business Events
6. Regenerate the Annual Return

Worked Example

For this fund, there is a total of $500 in Traditional Security losses, and the Actuarial Percentage is 50%.

Currently, the Annual Return, Section C would have $250 sitting under Section C > Other Amounts

Create a New Income/Expense Type

Navigate to Business Level > Settings > Investment Expense

Create a new Income/Expense Type. Note the GST Category, Tax Deductible and Tax Return Label settings.

Process a Negative Non-Tax Assessable Event

Navigate to Fund Level > Transactions > Fund Expense > General Investment Expense 

Create a business event with a negative $250 

Change the Income/Expense Type

Navigate to Business Level > Settings > Investment Expense

1. Select the expense account created in Step 1 and change Tax Assessable to "Yes"
2. Select "L1 - Other Income" for Tax Return Label
3. Select "Not Appointed" for Pension Apportionment Method
   
   

Process a Positive Tax Assessable Event

Navigate to Fund Level > Transactions > Fund Expense > General Investment Expense

Create a business event with a positive amount of $250 

Match the two Business Events

Navigate to the Fund Level > Transactions > Match Transaction

Regenerate the Annual Return

The Annual Return should now have the full $500 deduction claimed at Section C, L1