Understanding How to Fill the SMSF Annual Return

The self-managed superannuation fund annual return (SAR, or SMSFAR) is more than a tax return. In one form, the trustees report the fund’s income tax, answer the regulatory questions that come out of the audit, report each member’s contributions and balances, and pay the SMSF supervisory levy. The trustees are responsible for its contents even when an accountant or tax agent prepares it, and an approved SMSF auditor must finish auditing the fund before it can be lodged.

This guide covers the 2026 return, for the income year from 1 July 2025 to 30 June 2026, in the same order as the ATO’s Self-managed superannuation fund annual return instructions 2026.

The SAR is only for SMSFs. APRA-regulated funds and other super funds that are not SMSFs at the end of the income year lodge the Fund income tax return instead, which this article does not cover.

The major sections of the SMSF annual return

The return is organised into lettered sections, with items numbered 1 to 17 across them. Every SMSF completes Sections A, C, D, H and K, plus Section F or G (or both) for its members. The other sections apply only when the fund has something to report.

Some general rules apply throughout:

• Whole dollars: amounts in Sections B, C and E are reported without cents.
• Blank means nil: a blank label tells the ATO the amount is zero or the item does not apply, unless the instructions ask you to write 0.
• No tax, still lodge: an SMSF must lodge even if it has no tax liability.
• Schedules: a CGT schedule is needed if capital gains or capital losses for the year exceed $10,000, and a losses schedule if carried-forward tax losses and net capital losses together exceed $100,000. Trust distributions and certain withholding amounts can require other schedules.

Section A: SMSF information

Every item in Section A is mandatory.

Fund identity and return status (items 1 to 5)

Items 1 to 4 are the fund’s TFN, its name as it appears in the trust deed, its ABN and its postal address. Item 5 asks whether the return is an amendment (label A) and whether it is the first required return of a newly registered SMSF (label B). The second answer affects the levy in Section D. To amend a lodged return, you resubmit the whole return with label A marked Yes.

Auditor details (item 6)

Enter the auditor’s name, SMSF auditor number (SAN), phone number and address. Label A is the date the audit was completed. Labels B and C ask whether Part A (the financial audit) and Part B (the compliance engagement) of the audit report were qualified, and label D asks whether any Part B issues have been rectified. These answers come from the signed independent auditor’s report.

Bank account and electronic service address (item 7)

Label A is the fund’s own bank account. Refunds must not go to a trustee’s personal account, which risks being treated as illegal early access, or to a tax agent’s account. Label B optionally nominates a separate account for tax refunds, where a tax agent’s account is allowed. Label C is the fund’s electronic service address (ESA) alias, needed if the fund receives contributions from unrelated employers or rollovers under SuperStream.

Fund status, wind-up and pension income (items 8 to 10)

Item 8 confirms the fund is an Australian superannuation fund, gives its benefit structure code (most SMSFs are A for accumulation) and asks whether the deed allows the fund to accept government co-contributions and the low income super tax offset.

Item 9 asks whether the fund was wound up during the year. If so, give the date and confirm whether all lodgement and payment obligations have been met.

Item 10 covers exempt current pension income (ECPI): income on assets supporting retirement phase income streams, which is exempt from tax. Report the amount at label A and the method used: segregated (label B) or unsegregated, also called proportionate (label C). Label D confirms an actuarial certificate was obtained where one is needed. The amount must match item 11 label Y.

Section B: Income

Item 11 reports the fund’s income. Only a fund whose entire income is ECPI can skip most of it. It must be completed if the fund is non-complying, has non-arm’s length income, received assessable contributions, did not pay a member’s minimum pension amount, or had members who were not all in retirement phase for the whole year.

Investment income

• Rent (label B) and interest (label C): gross amounts.
• Dividends (labels J, K and L): unfranked amounts, franked amounts and franking credits. A complying fund also claims the franking credits as a refundable offset in Section D.
• Trust and partnership distributions (labels M and I): gross amounts, with a code for the type of trust at label M.
• Foreign income (labels D1 and D): gross foreign income, then net foreign income after related expenses.
• No ABN withholding (label H): gross payments where an ABN was not quoted. The tax withheld is claimed in Section D.
• Other income (label S): with a code, for items such as balancing adjustments, foreign exchange gains or insurance premium refunds.

Capital gains

Label G asks whether a CGT event happened in the year, and label M whether an exemption or rollover applied. Label A is the net capital gain after capital losses and any discount. A complying super fund can reduce a capital gain by one-third (33.33%) if it held the asset for at least 12 months. Gains on assets segregated to pay current pensions are disregarded.

Assessable contributions

Most contributions are not taxable income of the fund. The assessable ones are:

• Employer contributions (label R1), including salary sacrifice.
• Personal contributions (label R2) covered by a valid notice of intent to claim a deduction that the trustee has acknowledged. Personal contributions without a notice, and government co-contributions, are not assessable.
• No-TFN contributions (label R3): contributions for members who have not quoted their TFN. This label is mandatory; write 0 if there are none.

Label R totals them, less any amount at R6 where the fund transferred its tax liability on contributions to a life insurance company or pooled superannuation trust. Label F is the assessable part of transfers from foreign super funds.

Non-arm’s length income

Non-arm’s length income (NALI) arises when the fund earns more, or pays less, than it would have in an arm’s length dealing. A complying fund reports NALI only at labels U1 (private company dividends), U2 (trust distributions) and U3 (other), net of the expenses that relate to it, and it is taxed at 45%. NALI is never ECPI. A NALI loss is not reported at label U; it can only be carried forward against future NALI. NALI caused by non-arm’s length general expenses, such as free services from a related party, is not entered in Section B and is handled in the Section D tax calculation.

Totals

Label W is gross income, label Y is ECPI (matching item 10) and label V is total assessable income, W less Y.

Section C: Deductions and non-deductible expenses

Item 12 is mandatory. Deductible amounts go in the first column (labels ending in 1) and non-deductible amounts in the second (labels ending in 2). The categories are interest (in Australia and overseas), capital works, decline in value, members’ insurance premiums, the SMSF auditor fee, investment expenses, management and administration expenses, forestry scheme expenses and other amounts. Write 0 at H1 if there was no auditor fee. Tax agent fees and the supervisory levy are deductible management and administration expenses, while income tax paid goes in the non-deductible column at L2. New for 2026, general interest charge (GIC) and shortfall interest charge (SIC) incurred on or after 1 July 2025 are no longer deductible.

Expenses relating to ECPI are not deductible, so the fund apportions them and reports that share in the second column. Expenses relating to NALI or foreign income are netted against that income in Section B instead. Benefits paid to members are not fund expenses and are not reported here.

Label M1 is prior-year tax losses deducted. Label N is total deductions, label Y is total non-deductible expenses and label Z is total expenses. Label O, taxable income or loss, is mandatory; a loss flows to Section E.

Section D: Income tax calculation and the supervisory levy

Item 13 works out the amount payable or refundable. Labels A, T1, J, T5 and I are mandatory.

Tax on taxable income and contributions

Label A is taxable income and label T1 is the tax on it. For a complying fund, NALI (including general-expense NALI, worked out using the ATO’s method) is taxed at 45% and the remaining taxable income at 15%. A non-complying fund pays 45% on all taxable income. Label J is extra tax on contributions where no TFN was quoted: an additional 32% for a complying fund, so 47% in total.

Offsets, credits and instalments

From gross tax, the calculation subtracts non-refundable offsets such as the foreign income tax offset (label C), carry-forward offsets for early stage investments (label D) and refundable offsets (label E), mainly the franking credits offset at E1. The exploration credit tax offset (formerly E4) has been removed from the 2026 return because exploration credits cannot be received or claimed from 1 July 2025. Label T5 is tax payable. Credits for amounts withheld, such as no-ABN or foreign resident withholding, go at label H, and PAYG instalments raised for the year at label K.

Because a complying fund’s excess franking credits are refunded, an SMSF paying pensions can receive a refund even with little or no tax to pay.

Supervisory levy

The levy is paid with the return, even when there is no tax to pay, and is collected a year in advance:

• Label L: the 2026–27 levy of $259, printed on the return. Don’t change it.
• Label M: write $259 if an existing fund was wound up during 2025–26, which cancels the levy.
• Label N: write $259 if this is a newly registered fund’s first return. The fund then also pays the 2025–26 levy, $518 in total. A fund that was both registered and wound up in 2025–26 leaves M and N blank and pays $259.

Label S is the final amount due, or a refund if negative.

Section E: Losses

Item 14 reports losses carried forward. Label U is tax losses, reduced first by net exempt income (including ECPI) and excluding NALI losses. Label V is net capital losses. Keep the records supporting a loss until the amendment period has passed for the year the loss is finally used.

Sections F and G: Member information

Section F is for members at 30 June 2026. Section G is for people who stopped being members during the year, including members who died, and adds an account status and date of death. Complete one statement per member, combining all of their accounts. The ATO uses this information for co-contributions, excess contributions, Division 293 tax and members’ total superannuation balances.

Contributions

Report the member’s TFN, date of birth and opening balance at 1 July 2025, then contributions by type: employer (label A, with the principal employer’s ABN), personal (B), CGT small business exemption amounts (C and D), personal injury elections (E), spouse and child (F), other third party (G), downsizer contributions (H, with the date received) and amounts from foreign funds, reserves and non-complying funds. Label N is the member’s total.

Other transactions and balances

Label O is the member’s share of earnings or losses. Labels P and Q are rollovers in and out. Label R1 reports lump sum payments and R2 income stream payments, each with a code.

The closing balance is split by phase: accumulation (S1), retirement phase for income streams other than capped defined benefit income streams (S2), and retirement phase for capped defined benefit income streams (S3). The closing account balance at label S must equal S1 plus S2 plus S3. Label Y reports a member’s outstanding limited recourse borrowing amount where the conditions in the instructions are met.

The SAR does not update a member’s transfer balance account. Events such as starting or commuting a retirement phase pension are reported separately through event-based reporting.

Section H: Assets and liabilities

Items 15 and 16 are the fund’s balance sheet at 30 June 2026, at market value.

Assets (item 15)

Assets are grouped as Australian managed investments (15a), Australian direct investments (15b), crypto assets (15c) and overseas investments (15d). Direct investments include cash and term deposits, loans, listed and unlisted shares, residential and non-residential property, and collectables. Assets held under a limited recourse borrowing arrangement (LRBA) are reported separately at labels J1 to J6 by asset type, with the number of properties at J7. Label U is total assets.

Item 15e asks whether the fund held in-house assets, such as loans to or investments in related parties, and their total value. Item 15f applies to funds with an LRBA and asks whether the borrowing came from a licensed financial institution and whether members or related parties gave personal guarantees or other security.

Liabilities (item 16)

Borrowings are split into LRBA borrowings (V1), permissible temporary borrowings (V2) and other borrowings (V3). Label W is total member closing balances, which must equal the sum of label S across Sections F and G. Label X is reserves (assets not allocated to members) and label Y other liabilities. Label Z, total liabilities, must equal label U, total assets.

Sections I, J and K

Section I (item 17) applies only to funds with assets of $100 million or more, or those that elected into the TOFA rules, so most SMSFs leave it blank. Section J records family trust and interposed entity elections. In Section K, all trustees, or all directors of a corporate trustee, authorise the return after reviewing the audit, and a tax agent who prepared it signs the agent’s declaration.

How the SMSF annual return differs from a company tax return

Practitioners who prepare the company tax return will recognise the income and deduction sections, but the SAR differs in several ways:

• Tax rate: a complying SMSF pays 15% on most income and 45% on NALI.
• Capital gains: complying funds get a one-third discount on assets held for at least 12 months; companies get none.
• Pension income: ECPI has no company equivalent.
• Franking credits: a complying fund’s excess franking credits are refunded.
• Regulatory content: the audit outcome, member information, in-house assets, LRBAs and the supervisory levy are all part of the return.
• Balance sheet: member balances are liabilities, and total liabilities must equal total assets.

Audit, lodgement and due dates

Prepare the financial statements and member statements, have them audited, and lodge only after the signed audit report is in hand. The ATO does not issue a notice of assessment for an SMSF; the fund is treated as assessed on the day it lodges.

For SMSFs that lodge the 2026 return themselves, the due dates are:

• 31 October 2026: newly registered SMSFs, and SMSFs with one or more annual returns overdue on 30 June 2026 (unless granted a lodgement deferral). Payment is due by 1 December 2026.
• 31 January 2027: SMSFs that were a taxable large or medium entity in 2025–26. Payment is due by 1 December 2026.
• 28 February 2027: all other self-preparing SMSFs, unless the ATO has directed a different date. Payment is due the same day.

If more than one date applies, the earliest one counts, and a date that falls on a weekend or public holiday moves to the next business day. Funds using a registered tax agent may have different dates under the agent’s lodgement program, so check with the agent. General interest charge applies to late payments. Once a return is 2 weeks overdue, the ATO removes the fund’s regulation details from Super Fund Lookup, which can stop it receiving rollovers and contributions.

Most returns are lodged electronically through standard business reporting (SBR) software or a tax agent. A paper return is required in some cases, for example when a fund that was not wound up has no assets or liabilities, or has no assessable income. Keep the audit report and the working papers behind each label in case the ATO or auditor asks for them.

Preparing an SMSF annual return in Lodgeit

Lodgeit supports preparing and lodging the SMSF annual return alongside its other superannuation fund tax return features. A typical workflow:

1. Gather the records and finish the audit: bank, investment and distribution statements, contribution and pension records, and the signed audit report, which supplies the item 6 answers.
2. Connect Lodgeit to the ATO: nominate Lodgeit as your SBR software provider in ATO Access Manager using the software ID shown in Lodgeit.
3. Add the fund with the Superfund entity type: complete the client’s general, contact and tax settings to avoid errors later. The SMSF preparation guide notes the SMSF annual return form only appears when the entity type is set to Superfund. You can add the auditor as a client or enter their details in the form, and they carry over to later years.
4. Import the figures: if the fund’s accounts are kept in BGL SimpleFund 360, validate the return there, export it for Lodgeit as an XML file and import it into the SMSF annual return from the form’s menu (available from the 2022 income year). For Excel and other accounting software, set up the accounts for import with investment income as revenue and contributions, rollovers, taxes, transfers and pensions in equity by member, then import and map them. These imported financials feed the fund’s financial reports; the tax figures are entered in the form.
5. Activate the sections you need: when you start the form, select the sections that apply, such as interest or dividends. Each has a detail screen whose totals flow to the matching labels, and you can change the selection later.
6. Complete, validate and lodge: work through Sections A to K, answer Yes to the newly registered fund question for a first-year fund so the levy is right, clear the validation errors, have the trustees sign, and lodge to the ATO.

The figures and dates above come from the ATO’s 2026 instructions; for a fund’s specific circumstances, check the current ATO instructions or ask the fund’s auditor or a registered tax agent.