What tax do I have to pay on the interest my SMSF account earns?

As long as your SMSF complies with all the regulations stipulated by the ATO, all income will be taxed at the concessional rate of 15% p.a. However, if your fund is found to be non-complying, you’ll be stung with a tax bill which is equivalent to the highest marginal tax rate, which is currently 45% for those earning over $180,000 p.a.

What capital gains tax (CGT) discount applies to SMSFs?

Complying SMSFs are entitled to a CGT discount of 33%, as long as the relevant asset had been owned for at least 12 months. For example, if your SMSF bought an investment property and, after five years, sold it for a profit of $150,000, you would only be liable to pay tax on $100,000 of that profit, as a third of the profit has been discounted. Capital gains tax isn’t separate from income tax: you calculate your capital gains tax obligation, add this to any other income you may have received and pay income tax on this as a whole amount. In this example, you’d add $100,000 as a CGT income amount to any other income your fund had made that financial year, and you’d pay 15% income tax on it.

What is the SMSF supervisory levy and do I have to pay it?

The SMSF supervisory levy is a fixed amount which all SMSFs pay to the Australian Taxation Office to help pay for fund supervision. The levy has to be paid in advance. Currently, the annual SMSF levy is $259 per year. However, because it has to be paid in advance, you’re initially required to pay two years’ worth of levy ($518) when setting up a new SMSF, which ensures you are paid in advance. After this initial payment of $518, each subsequent year you’ll pay just $259. This amount is payable regardless of which month your SMSF’s registration date is, so you’ll pay $259 per financial year of operation, or part thereof. When a SMSF is winding up, it is not required to pay the levy in its final year of operation due to its previous advance payment.

Can I set up a SMSF myself or should I get professional help?

There is a multitude of rules and regulations which apply to self-managed super funds, including which forms must be submitted to the ATO to register the fund. A SMSF must be run for the sole purpose of providing retirement benefits for the trustees and, as the trustee operating the fund, you’re fully responsible for complying with all relevant legislation (and there are heavy penalties for non-compliance). You should consider whether you have the time, knowledge and professional skills to set up and run a SMSF yourself, or whether you’d be better off delegating this to a professional financial advisor, super fund or accountant.

Can I have a SMSF but get someone else to invest my money on behalf of my fund?

Yes – you can have a SMSF but place your money in a professionally managed fund. This means you’ll have the freedom to be able to make choices about how your funds are invested (for example, what proportion of your funds are invested in property, shares, fixed interest term deposits and more) but professional fund managers do the investing on behalf of your fund. There are also managed fund pools which combine the funds from many SMSFs. You can buy into these pools by purchasing units, or ‘shares’, in the pooled funds’ profits. Naturally, there are fees charged for these investment services, ranging from monthly fees to an annual fee which can be several hundred dollars depending on the level of investing service you require.