When setting up your self-managed super fund, it’s important to understand exactly what this form of superannuation entails. This includes understanding all the fees and obligations that come with managing your own super fund.
The SMSF supervisory levy is a fee that can often take first-time SMSF trustees by surprise. In fact, some aren’t even aware of it.
In this article we’ll tell you exactly what it is, why it exists, and your SMSF levy obligations.
Your Liston Newton tax adviser can help you set your SMSF up for a successful future, and ensure you’re aware of all your ATO obligations. Contact us today to discuss the strategies that will suit your needs.
What is the SMSF supervisory levy?
The self-managed superannuation fund levy is an annual payment that all SMSF funds must make to the ATO. The levy currently sits at $259.
Interestingly, the SMSF levy is paid in advance each year, for the financial year to come.
How it works
The SMSF levy is pad as part of your annual SMSF tax lodgement and is added to the tax payable calculate for your SMSF. Even if your SMSF has no tax payable for that financial year, the SMSF levy is required to be paid.
If your SMSF is due for a tax refund, the SMSF levy is deducted from its refundable amount.
Example
Say in 2019 your SMSF had a $1,000 taxable income, based on the interest it earned. The tax for this fund would be $150, calculated at a 15% tax rate.
The SMSF supervisory levy for this year is $259. This means you owe the ATO a total of $409 for this financial year.
Key considerations for the SMSF supervisory levy
While the SMSF levy is reasonably straightforward, there are a number of points you must be aware of.
Paying twice in your first year
For those new to the world of SMSFs it’s crucial to know the typical payments required of your fund.
The SMSF supervisory levy works under an advance payment system. This means that newly-registered SMSFs must pay double the SMSF supervisory levy in the year that they register.
So for your first year, you’re paying $518 in total: the $259 levy for the financial year in which you register, plus the $259 levy for the following financial year.
This is amount is payable even if the SMSF is registered part of the way through its first financial year.
Wrapping up: your SMSF’s final year
There are a number of important steps required when wrapping up your SMSF.
- You must notify the ATO within 28 days of its conclusion
- All assets in your fund need to be dealt with so that no assets are left
- A final audit of your fund must be arranged
- All your reporting responsibilities must be completed.
Your SMSF supervisory levy obligations is the easiest of these steps. In its final year, your SMSF is not required to pay the SMSF levy because it’s already paid for this year in the previous year’s tax lodgement.
This is one of the benefits of the advance payment system.
Lodging your SMSF levy on time
As the trustee of your SMSF you must lodge your SMSF levy, along with your tax return, by the due date for your tax. If you prepare your tax return as the fund’s trustee, this is typically 28 February of the following financial year. If you use a tax agent, this date can vary.
Failure to lodge by the due date can result in penalties, and loss of tax concessions for the SMSF.
One key thing to note is that the ATO does not issue a Notice of Assessment for SMSFs. This can be found at your ATO portal, or provided to you by your tax accountant.
