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. Moving into a tax free environment is one of the main objectives of an SMSF.
An SMSF bought BHP shares at $10 per share. If the SMSF keeps these until the retirement phase and sells the shares for $45 each, the total gain of $35 per share will be tax free.
Question: My SMSF has $10,000 from bank interests but the SMSF investment portfolio (shares) is down about $4,000. Can the SMSF offset losses from the portfolio against the bank interests if the SMSF sells the shares?
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 that can be offset against this cannot be of a capital nature. You can deduct bank fees, accounting and auditing costs.
Annual Taxation Returns
If you are a client of Superannuation Warehouse we act as your Tax Agent and complete and submit your SMSF tax return. If your SMSF uses 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 returns and instructions on how to complete the tax return for recent years, click on the links below.
- SMSF 2018 return and 2018 Annual Return instructions
- SMSF 2017 return
- SMSF 2016 return
- SMSF 2015 return
- 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
There is a fee payable by all SMSF’s on an annual basis called the Supervisory Levy. This fee is payable to the ATO and it enables them to perform their function as Regulator. We have a page discussing the SMSF Supervisory Levy in more detail.
Nil Tax Returns
When an SMSF is newly set up and there are no transactions at 30 June of that financial year, an RNN (Return Not Necessary) may be lodged. The purpose of lodging a RNN 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, a RNN can only be submitted once. In order to lodge a RNN, the ATO usually require a copy of the SMSF’s bank statement noting the Fund is activated and contributions or roll-overs have been deposited into the SMSF bank account.