An SMSF is a great tax-effective way to save for your retirement benefit. The tax in an SMSF is generally:
An SMSF generally pays tax at 15% for income in the SMSF but would not pay tax on roll overs into the SMSF or non-concessional contributions (after tax money) added to the Fund. There are generally 3 ways to add money into the SMSF which are:
Non-concessional contributions are contributions without tax deduction claimed, including funds transferred from your personal bank account to your super account. No tax applies to the amounts below the cap (currently $110,000). Any amounts that exceed the cap will be taxed at a rate of 47%.
For more info, please refer to our Non-Concessional Contribution page.
Once you reach the preservation age (currently 55), you have the option to commence a pension income stream. For people aged over 60, no tax applies to pension withdrawals. For people aged between 55 and 59, there is a tax payable on the taxable component which typically consists of the concessional contributions. The tax rate is your marginal tax rate with a 15% ‘pension rebate’.
For people who has commenced pension, income is non-taxable. For people who has NOT commenced pension, a 15% tax will be applied to the income.
The tax implications of capital gains depend on the period of the assets owned and the pension commencement status. The following table shows the tax rates under different situations:
|Assets owned over 12 months||Assets owned under 12 months|
|Member has NOT commenced pension||
|Member has commenced pension||
The ATO has revealed the most common errors made in the SMSF annual returns. If we are the tax agent for your SMSF, we will make sure the common mistakes are avoided when we lodge your tax return. The common mistakes are listed below:
An SMSF need to set up an account in the name of the Fund which is separate to Trustees’ personal bank accounts. The SMSF bank account details need to be included in the tax return when lodging your annual return.
An ESA is a data format that Funds must use in order to accept employer contributions.
Click the button below for more info as to how to obtain a SuperStream code:
As per the ATO ruling, SMSF assets need to be reported at market value as at 30 June. Incorrect valuation information may jeopardise your SMSF’s complying Fund status and may incur penalties.
The ATO won’t accept a tax return from an SMSF that has no assets unless the Fund is closed down. If an SMSF was set up , and is yet to receive contributions or rollovers, the Trustee can request the ATO to approve a return not necessary(RNN).
All SMSFs are required to appoint an external auditor to conduct the audit process on their tax returns. They also need to supply the auditor with any info they request to complete the audit.
More information can be found here.
The tax effects on withdrawals are as follows:
The ATO gives a summary of the tax affects of lump sum payments in the summary table here.
For more info on how your SMSF pays tax, please watch the video below.