Tax payable in your annual SMSF tax return is made out of 3 components…
1. ATO Supervisory Levy
Each year when your tax return is lodged your fund is required to pay a supervisory levy to the ATO (currently $259). Note that new funds in their first year need to pay this amount twice when lodging their first tax return then once a year from then on.
2. Income, Dividends & Contributions / Expenses & Fees
All the income into your fund from employer and personal contributions (up to $25,000) and dividends is taxed at 15%. The taxable amount is offset by any expenses and fees your fund paid throughout the year. (eg accounting fees, hardware wallet etc). Contribution taxes are covered in this blog post: https://newbrightoncapital.com/blog/f/how-are-super-contributions-taxed
3. Capital Gains / Capital Losses
Any time a single asset is sold for a profit. For example, if you buy a coin for $100 and then you sell the coin for $200, you are taxed 15% on the $100 profit you made ($15 tax).
If you make a loss on the sale of an asset, your loss will be offset against your gains for the financial year and if you make a loss overall, your capital loss is carried forward into the next financial year.
Please note: It is possible for the “on paper” value of your fund to have gone down in value and the fund may still have to pay tax. This is because it is not the value of the assets that determines the tax payable but whether or not any of the assets sold during the year were sold at a profit.
Profits in super is taxed at 15%. If an asset is classified as property like realestate or crypto currency, then capital gains tax exemptions apply. This means that if you buy and sell the property within one year and make a profit you’ll be taxed the normal 15%, however, if you sell an asset after owning it for 1 year or more, the profit will be taxed at only 10%.
When can you access your super?
You can access your super…
- when you turn 65 (even if you haven’t retired), or
- when you reach preservation age (shown below) and retire, or
- under the transition to retirement rules, while continuing to work.
There are very limited circumstances where you can access your super earlier. These circumstances are mainly related to specific medical conditions like being terminally ill or severe financial hardship.
Your preservation age is not the same as your pension age. Your preservation age is the age at which you can access your super if you are retired (or have started a transition to a retirement income stream).
Pension age is the first of when you either turn 65 or preservation age and you are also retired. Your preservation age depends on when you were born. You can use this table to work out your preservation age.
Once you hit preservation or pension age (shown above) and start a pension, you can add up to $1.6 million into a retirement phase account where the earnings are taxed at 0%. Earnings can not be reinvested into the retirement account and must be either added to an accumulation super account (where future earnings on that money are taxed at 15%) or paid out to you personally.