Income in the form of interest received, dividends and rent is normal assessable income inside of Superannuation. All of the above mentioned income sources are taxed at the Superannuation taxation rate of 15%.
If tax has already been paid on income earned before it reaches the SMSF, like fully franked dividends, a credit will be allowed to offset any double taxation of income.
| Impact of Franking Credits of taxation payable | |
|---|---|
| Dividend Cash amount received by SMSF (Fully Franked) | $500 |
| Add Franking Credit Received | $214.28 |
| Equals Assessable SMSF Income (Cash + Franking Credit) | $714.28 |
| SMSF Tax on that Income (Assessable Income X 15%) | $107.14 |
| Less Franking Credits Received | $214.28 |
| Equals Tax Refund | $107.14 |
Franking Credits are always added to the dividend income and then credited back after all income has been added.
Interest or Rent does not usually carry any taxation benefits like franked dividend income. Some distributions may have other income like deferred income which does not get counted in the year of receipt as assessable income. Deferred income as its name suggests defers the taxation of the asset until a capital gain event occurs (i.e. your SMSF sells that asset). Deferred income is common in listed Unit Trusts and Managed Funds. When you receive deferred income, your assets cost base is adjusted lower which will increase the capital gain upon its sale – as long as you sell it at a profit.