SMSF Tax
What taxes can an SMSF pay every year?
Most of SMSF will only need to pay income tax.
However, depending on the structure and activity of the fund, some SMSFs may also be registered for additional tax obligations that are reported separately, either quarterly or annually:
- GST
- PAYG withholding tax
- PAYG instalment
How is SMSF income assessed by the ATO?
Every SMSF must lodge an annual SMSF tax return with the ATO.
The return reports the fund’s:
- assessable income
- taxable income
- tax payable
Assessable income generally includes:
- concessional (before-tax) contributions
- dividends, trust distributions, interest and rental income
- foreign income
- capital gains
- non-arm’s length income (NALI)
What tax rate is applied to the taxable income?
SMSF income may be taxed at different rates depending on the type of income and the fund’s stage:
- 15% – standard accumulation phase tax rate
- 10% – discounted capital gains tax rate (where eligible)
- 0% – income from assets supporting retirement phase pensions (exempt current pension income)
- 45% – applies to non-arm’s length income or certain penalty situations
Why do I still pay income tax if my SMSF has no income?
This is due to SMSF supervisory levy that is included in your SMSF tax return.
- $518 for a newly established SMSF
- $259 from the second year onwards (standard ongoing levy)
This levy is collected through the SMSF annual return and applies regardless of whether the fund made a profit or a loss.
Why do I need to pay income tax even my SMSF had a loss in the financial year?
Even if an SMSF reports an overall loss, the ATO supervisory levy still applies and is included in the annual return.
This is because:
- the levy is an administrative government charge from the ATO, not an investment tax
- it is not dependent on fund performance
For more information or assistance with SMSF tax compliance, please feel free to contact us on 03 9557 4079 or email info@icaresuper.com.au