SMSF Tax Rates

Different tax rates apply to the taxable income in an SMSF based on the following circumstances:

1. Type of income.
2. Accumulation mode or pension mode of the SMSF.
3. Has the investment been held in the SMSF for 12 months?
4. Is the income arm’s length income?

Basically, four tax rates apply to the income in an SMSF: 15%, 10%, 0%, and 45%.

For income subjected to the 15% tax rate:

If the SMSF member balance is in accumulation phase or has commenced a transition to retirement pension, a 15% tax rate will be applied to the following:

• Concessional contributions.
• Dividends, distributions, interest, and foreign income.
• Capital gains from assets owned for less than 12 months.

For income subjected to the 10% tax rate:

• Capital gains from assets owned for more than 12 months.

For income subjected to the 0% tax rate:

• Non-concessional contributions.

If the SMSF member is in pension phase, a 0% tax rate will be applied to the following income from the pension accounts:

• Dividends, distributions, interest, and foreign income.
• Capital gains.

For income subjected to the 45% tax rate:

• Non-arm’s length income will be taxed at 45%, regardless of whether the member balance is in accumulation mode or pension mode.

Normally, non-arm’s length income includes the following:

• Dividends from private companies.
• Income from a discretionary trust.
• Income from investments that have non-commercial conditions.
• Income from a non-commercial scheme.

For more SMSF tax advice, please feel free to contact us.