Mistakenly people often think dividend income is tax free in your super fund, infact the a franking credit often results in no tax payable or even a refund to the SMSF.
As your super fund is taxed at 15% on its income, fully franked dividends from Australian Companies carry a 30% franking credit (meaning its already paid tax at a rate of 30%). So the government gives you back the 15% as a refund back to your super fund. So if you receive $50,000 in dividends then approx $7,500 would be refunded back to your super! Actually the calculation includes a grossing up amount but as a rough guide that’s your refund!
Pension Phase – Even better when you have retired and are drawing a pension from your super, the pension tax rate is Nil (0%) so the tax refund would be the full 30% franking credit.
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