SMSF Income Tax Rate

Complying Super Funds

The normal income tax rate of a complying self-managed superannuation fund in accumulation phase is 15% of its taxable income which will also specifically include:

assessable contributions – essentially those which for which a tax deduction is claimable
investment earnings – dividends, interest and rent
capital gains within 12 months

Capital gains after 12 months are taxed at 10%.

The government maintains a public register of complying super funds here.

Larger Superannuation Balances – Higher Tax From 1 July 2026

A second threshold will be introduced to target super concessions on the earnings of large balances above $10 million.
The total concessional tax rate applied to earnings on balances between $3 million and $10 million will be 30 per cent (starting 1 July 2026).
The total concessional tax rate applied to earnings on balances over $10 million will be 40 per cent (starting 1 July 2026).
The large balance thresholds of $3 million and $10 million will be indexed to maintain relativity with the Transfer Balance Cap.
The earnings calculation will be adjusted so that concessional tax rates on large balances only apply to future realised earnings

Legislation passed:

Certain types of income are basically taxed at penalty rates, at a rate which matches the top marginal rate on the personal income tax scale.

Higher rates are applicable (from 1 July 2017) to:

non-arms length income and earnings of a non-complying fund – 45%
contributions without quotation of a tax file number – 47%
contributions above the allowable caps – subject to corrective withdrawals when allowed – 47%

Exempt income – funds in the pension phase

Income that a complying SMSF earns from assets which support an eligible income stream (pension) entitlement is EXEMPT from income tax EXCEPT earnings from assets supporting a Transition to Retirement Income Stream from 1 July 2017.

Fund expenses associated with exempt income are not deductible, and where applicable should be apportioned between the pension and accumulation funds. Some expenses however, such as the supervisory levy and death and disability premiums may still be claimed in full. See more here.

Capital gains discount

Complying SMSFs are entitled to a capital gains discount of one-third in respect of assets which had been owned for at least 12 months. The capital gain is reduced by 1/3rd when calculating taxable income.

When the normal tax rate of 15% for a complying fund is taken into account, a 1/3rd discount effectively reduces the nominal tax rate on capital gains to 10%.

Allowable capital losses – both current year and past years – are deducted from current year capital gains before applying the discount.

Warning: Schemes to take advantage of the low super fund tax rate

The Tax Office is on the lookout for schemes or arrangements which channel income through a super fund in order to get the benefit of a low 15% or zero income tax rate.

The consequences of getting caught out are not just in having to pay back the tax saved – in worst cases the cumulative effect of penalties and interest can almost wipe out a fund’s assets, and associated individuals banned from having an SMSF.

SMSFs and GST

SMSFs are subject to the general rules which require registration if GST turnover exceeds the turnover limit which is currently $75,000.

Otherwise GST registration (and therefore access to GST credits) is optional, and whether it is worth doing so should be weighed up against the expected value of GST credits claimable as against the additional reporting and administration involved.

The value of GST credits will be limited due to the input-taxed nature of most investment income, giving rise to a nil or reduced credit.

There is more information about this here: GST credits and financial supplies

Further information

This page last modified 2026-03-12