Pension Phase Self-Managed Superannuation Funds - Treatment of Capital Gains and Losses

Are you a trustee or member of a self-managed super fund?

At a glance: A publication called "Self-Managed super funds and tax exemptions on pension assets" has been released by the Tax Office to provide guidance on the tax treatment of capital gains and losses for self managed superannuation funds in pension phase.

Generally, ordinary income and statutory income earned by a superannuation fund from assets held to provide for pensions is exempt from income tax. Generally, where the assets having the sole purpose of paying the pensions have been set aside from all the other fund assets, a capital gain or loss resulting from the disposal of one of these assets can be disregarded.Net capital losses from these segregated assets cannot be used to offset any other capital gains earned by the SMSF.

For SMSF's with unsegregated pension assets, all the funds capital gains and losses are calculated each year and any net capital gain or loss must be added to any other assessable income of the fund before working out how much of the income is exempt from tax as per the actuarial certificate.

Click here for a copy of the guide and to visit the ATO website at http://www.ato.gov.au.

Remember: Ensure you are aware of the exemptions available for superannuation funds in pension phase and the tax treatment of capital gains and losses for SMSF's in pension phase. Contact us if you require any clarification or advice.