SMSF Tax Return

Each year all Self Managed Super Funds are required to lodge an SMSF Tax Return with the Australian Taxation Office. This SMSF tax return is lodged once the audit is finalised and contains financial information along with regulatory information, members contributions and balances to the Tax Office. This is far more detailed than a standard business or personal tax return as it includes a great deal of compliance information as part of the Tax Office’s surveillance of the super space.

It is important to ensure that your fund is compliant in order to access the concessional tax treatment which is one of the key benefits of the super system. In order to remain compliant, it is important to understand the rules and obligations imposed on your SMSF via the Superannuation Industry (Supervision) Act 1993 and the linked Superannuation Industry (Supervision) Regulations 1994.

Lodgment Deadlines via a Tax Agent

Tax Returns for first year Self Managed Super Funds are due by the 28th of February while standard funds are generally required to lodge by the 15th of May. If a funds tax return is not prepared, audited, and lodged, on time the ATO may change the compliance status of the SMSF on the Super Fund Lookup tool to ‘registration details removed’. At this point the fund will be unable to accept further contributions which will prevent your employer contributing to the fund.

Supervisory Levy

The ATO is the government body in charge of supervising Self Managed Super Funds. In order to pay for these compliance activities, they change a supervisory levy to all SMSFs on an annual basis. Currently this levy is $259 per year which is charged to your super fund when the tax return is lodged as an additional tax payable over your standard tax rates. This levy is obviously not optional and is why you may have a tax payable even in years where your SMSF has made no taxable income.

In your first year as a new SMSF, the levy payable will be double the usual fee at $518 which covers the current financial year and the following one.

For example, if you are lodging for the 2021–22 financial year, the payment will cover the 2021–22 and 2022–23 financial years.

SMSF Tax Rate

For the majority of Self Managed Super Funds the taxable income is taxed at a concessional rate of 15%. To be entitled to this rate, your fund must be a ‘complying fund’ that follows the laws and rules for SMSFs. For a non-complying fund, the rate is the highest marginal tax rate. Any non-arm’s length income earned by the fund is also taxed at the highest marginal tax rates such as:

• Income derived via a scheme in which parties are not dealing at arm’s length.
• Income derived by an SMSF as a beneficiary of a discretionary trustee.
• Payments received above market rates, eg. Parties not dealing at arm’s length such as non-commercial amounts of rent being paid on the lease of a building, usually via a related party.
• For more information about the consequences of non-arm’s length income see the ATO Website and always remember the cardinal rule, all transactions must be commercially driven and valued.
• There are also risks around non-arm’s length expenses which exist if parties are not dealing with each other on standard commercial terms. To learn more about NALE checkout the recent ATO ruling on the subject LCR 2021/2.

ATO Lodgments

There may be other ATO lodgments required for your fund depending on if it is required to be GST registered or required TBAR reporting. Some of the other ATO lodgements that we regularly assist with include:

• Business Activity Statements (BAS).
• Instalment Activity Statements (IAS).
• Transfer Balance Account Reports (TBAR).