There are two types of taxable income – income of a revenue nature and income of a capital nature. Note that capital losses can’t be offset against revenue gains for the calculation of taxable income. Capital losses are quarantined and can only be utilised against capital gains.
When an SMSF goes into pension mode, all gains become tax free, so the Fund won’t pay any tax on its SMSF income. The objective of the SMSF is to move into a tax-free environment.
Generally, tax rates are lower in Superannuation than in other environments; therefore, there is usually an advantage to put more money in Superannuation Funds.
The SMSF bought BHP shares at $10 per share. If the SMSF keeps this until retirement phase and sell the share at $45, the total gain of $35 will be tax-free.
Question: My SMSF has $10,000 from bank interests, but the SMSF investment portfolio (shares) is down to $4,000. Can the SMSF offset losses from the portfolio against the bank interests if the SMSF sells the shares?
Answer: Short answer – NO. Shares are held on capital account and losses on capital account will be quarantined. Only capital gains can be applied against these losses. Interest is of a revenue nature and will be taxed at 15%. Expenses offset against this cannot be of a capital nature. You can deduct bank fees, accounting and auditing costs.
Annual Tax Returns
If you are a client of Superannuation Warehouse, we act as your Tax Agent to complete and submit your SMSF tax return. If your SMSF use a registered Tax Agent like Superannuation Warehouse, the SMSF gets an extension to submit its tax return. The Tax Return is generally due 15 May the following calendar year, i.e. 10.5 months after the year end.
For a copy of SMSF annual tax returns and instructions on how to complete the tax return for recent years, click on the links below.
- SMSF 2019 return and 2019 Annual Return Instructions
- SMSF 2018 return and 2018 Annual Return Instructions
- SMSF 2017 return and 2017 Annual Return Instructions
- SMSF 2016 return and 2016 Annual Return Instructions
- SMSF 2015 return and 2015 Annual Return Instructions
- SMSF 2014 return and 2014 Annual Return Instructions
- SMSF 2013 return and 2013 Annual Return Instructions
- SMSF 2012 return and 2012 Annual Return Instructions
- SMSF 2011 return and 2011 Annual Return Instructions
- SMSF 2010 return and 2010 Annual Return Instructions
SMSF Supervisory Levy
The SMSF Supervisory Levy for the 2020 financial year is $259 per annum for an SMSF. The Supervisory Levy is payable to the ATO when you lodge your annual return.
Pay As You Go (PAYG)
Pay As You Go (PAYG) Instalments is a system for paying instalments during the income year towards an SMSF’s expected tax liability on the income. The PAYG instalments for the financial year are credited against the annual tax assessment to determine whether the Fund owes more tax or are owed a refund.
When an SMSF is newly set up and there are no transactions in the SMSF at 30 June of that financial year, a RNN (Return Not Necessary) can be lodged. This is to advise the ATO that there are no transactions in the SMSF. The ATO gives some guidance on how to complete a RNN. Remember, the RNN, can only be submitted once. In the following year if there are still no transactions in the SMSF, the SMSF has to be closed down.
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