The SMSF tax regime is feature not to be missed. My favourite tax rate (0%) can apply in many cases. But with these concessions comes a need to comply with rules. Get it right and get the rewards!
SMSFs are subject to income tax but receive concessional treatment if they are complying funds. A complying SMSF’s taxable income is generally taxed at a rate of 15%, compared with 45% for a non-complying fund.
The most common types of assessable income for complying SMSFs are:
- assessable contributions
- interest, dividends and rent
- net capital gains.
However, certain types of SMSF income are taxed at different rates:
- non-arm’s length income is taxed at 45%
- no-TFN contributions are taxed at 46.5%
- current pension income is exempt from tax ie 0%
A complying SMSF is entitled to claim deductions for expenses, such as the supervisory levy and auditor fees, that are incurred in gaining or producing assessable income.
SMSFs must register for GST if they have a GST turnover of $75,000 or more. Most SMSFs don’t have this much GST turnover and so don’t need to register but often an SMSF chooses to register.