SMSF Tax Rates
Understanding how your SMSF is taxed is critical for effective retirement planning. SMSF tax rates depend on:
- The type of income earned
- Whether the fund is in accumulation or pension phase
- The member’s Total Superannuation Balance (TSB)
- How long assets are held (capital gains discount)
- Whether income is earned on an arm’s length basis
Division 296 Tax
Division 296 introduces additional tax tiers for high super balances, applied at the individual level.
New Tiered Tax System (as at 1 July 2026)
- Up to $3 million → standard SMSF tax rules apply
- $3 million to $10 million → additional 15% tax on earnings (effective 30%)
- Above $10 million → additional 10% tax on top (effective up to 40%)
This means:
- Earnings above $3M are taxed at 30% total
- Earnings above $10M can be taxed at up to 40% total
Importantly, this additional tax only applies to the proportion of earnings attributable to balances above each threshold, not the entire SMSF.
Standard SMSF Tax Rates (Below TSB)
For most SMSFs, the existing concessional tax system still applies:
- 15% Tax Rate (Accumulation Phase)
If the SMSF is in accumulation phase or transition-to-retirement:
- Concessional contributions
- Dividends, interest, distributions, foreign income
- Capital gains on assets held less than 12 months
- 10% Tax Rate (Discounted Capital Gains)
- Applies to assets held more than 12 months
- Reflects the one-third CGT discount
- 0% Tax Rate (Pension Phase)
When an SMSF enters retirement phase:
- Investment income becomes tax-free (0%)
- Includes dividends, interest, distributions and capital gains
- 45% Tax Rate (Non-Arm’s Length Income – NALI)
Income that is not at market value is heavily penalised:
- Taxed at 45%, regardless of accumulation or pension phase
Examples include:
- Private company dividends under non-commercial terms
- Discretionary trust income
- Related-party investments not at market rates
- Non-commercial arrangements or schemes
For more SMSF tax advice, please feel free to contact us.