Questions of the Week – Tax on SMSFs

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Question

I would like to clarify tax treatment for a person over 60, who has total super of say $750K. I believe any payments made from an SMSF are free of tax. I think though that any earnings inside the fund are still subject to the 15% earnings tax. And tax on contributions from an employer is still 15%. Is this right?

Answer, Paul Rickard

Thanks for the question.

  1. a) Yes, provided the recipient is over 60 and the payment is not from an unfunded source (defined benefit scheme), payments are free of tax;
  2. b) Investment earnings inside the fund (SMSF) are subject to a 15% tax, unless the investments wholly support the payment of a super pension, in which case they are taxed at 0%; and
  3. c) Concessional contributions, which include the employer’s 9.5%, salary sacrifice contributions and any contributions you claim a tax deduction for, are taxed at 15% at source. If you earn more than $250,000, an additional tax of 15% applies (known as Division 293 tax).

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