Like other super funds, SMSFs can offer significant tax advantages compared to non-super investments. Here’s a brief summary of some of the potential benefits:
- Concessional super contributions, such as super guarantee contributions, are taxed at just 15%.
- Your SMSF’s investment income is generally taxed at a maximum rate of 15%, while capital gains are taxed at a maximum of 10% where assets have been held for 12 months or more.
- Once you have retired and started receiving a superannuation pension, your fund will generally pay no tax on income generated by your pension account up to the Transfer Balance Cap of $1.6 million. That means you will pay no tax on your investment income or capital gains, and no tax on your pension payments (assuming you are over the age of 60). If your pension account has invested in direct shares, you may even receive a tax refund for franking credits.
But remember — tax laws are complex and everyone’s situation is different. So it’s important to consult your tax adviser before you invest.