What are the tax benefits of my SMSF?

Self-managed super funds are great because they can attract tax breaks. Here we break them down and explain how they work. 

Self-managed super funds (SMSFs) are enjoying a period of growing popularity, with the total number of SMSF members breaking through the million mark early in 2014. The number of SMSFs has increased from around 400,000 in June 2009 to over 530,000 in June 2014 according to data from the Australian Taxation Office.

This increase in SMSFs means that more people are being exposed to the idea of SMSF loans to fund investments. The main reason being that SMSFs have different tax rules in comparison to assets purchased in your own name. Here is an explanation of how they work.

Income taxes

SMSF income is taxed at 15 per cent, provided your SMSF is a ‘complying fund’. This rate is rather good seeing as the lowest tax rate for working residents earning above $18,200 annually is 19 per cent. In addition, any other assessable contributions are also taxed at this 15 per cent rate. Any contributions, in general, that are not made by the member can be taxed at this rate, so long it is a complying SMSF.

Once the fund is in pension phase, tax benefits become even greater. If the assets are being held for the sole purpose of providing pensions, then its income can be exempt. However, in order to be able to get these exemptions, you have to be receiving pensions from your SMSF and you have to go through a few steps to make sure it will be applied.

Capital gains

Net capital gains, the total capital gains for the year less total capital losses, are part of your SMSF’s assessable income. What’s great about complying SMSFs is that they can also get a capital gains tax discount if the asset has been owned by the fund for over 12 months. This discount is one third of the tax, so  you are able to save more than if you were to own the asset if you hold onto it for a longer time.


Everyone’s favourite word in regards to taxes. Deductions are when there are losses from producing income for the SMSF either through the management of assets or businesses, such as negative gearing from paying the interest on SMSF loans. There aren’t many deductions that are SMSF specific – they are usually the same as the general superannuation fund ones, which are applied to contributions as a whole. Of course, tax law, especially in regards to SMSF loans can be pretty complex, so it’s worth talking to our specialists if you have any questions.