Capital Gains & Losses

Capital Gains made in the super fund is also reduced to 10% (CGT discount of one third) from assets (investments) held after 21.09.1999 and where the assets (investments) are held for more than 12 months. Where a SMSF is wholly in pension phase capital gains are tax free.

<Segregated Assets> approach means any capital gain is disregarded and not included in the taxable income of the fund. Whereas the <unsegregated assets> approach a proportion of the capital gain will be exempt based on the value of the current pension liabilities as a proportion of the funds total superannuation liabilities (s295-390(3) ITAA1997.   

Capital losses – unsegregated assets – whole capital loss can be carried forward whereas segregated assets – capital loss cannot be carried forward but also cannot offset against current year gains! 

Up until recently there was uncertainty whether tax was payable on capital gains arising after death of a member who was in pension phase prior to death. good news….a Draft ruling has been recently overturned to extend the tax free status of capital gains after death.

Here’s what the ATO has to say <ATO-Link>.