If your SMSF has a shared pool of assets that is supporting one or more accounts in pension-phase as well as one or more accounts that are not in pension-phase then you will normally have to get a tax-exemption certificate (ITAA 1997 s295-390) to claim tax exemption on the proportion of income earned by the pension-phase assets. The certificate will specify what proportion of the normal assessable income is exempt from tax.
But there are special circumstances in which a certificate may not be required to claim tax exemption. An example is a fund which starts the year entirely in non-pension phase and during the year (after 1-July but before 30-June) changes entirely to pension-phase. The fund cannot claim tax exemption for the period before the pension/s starts, but it is fully tax-exempt after the pension/s starts. Since the market value of the fund must be measured at the time the pension/s start it is therefore possible to determine the tax liability of the fund without a tax certificate.
Check with your auditor or the Australian Taxation Office if special circumstances apply to your fund. Feel free to phone us for a preliminary discussion.
If your SMSF is not paying pensions then you cannot claim tax-exemption. In this case you will usually pay 15% tax on the normal assessable income earned during the year, net of allowable deductions ad rebates.
If all the accounts in your SMSF are paying account-based pensions then you may not be required to pay any tax on the income earned by your fund during the year (ITAA 1997 s295-385). For this purpose 'account-based pensions' include the old-style allocated pensions and market-linked pensions (see ITAR 1997 s295-385.01 for a list of prescribed pensions).
From 1-July 2017 you must be aware of your Transfer Balance Cap. If you have superannuation assets in excess of your Transfer Balance Cap the excess must be moved to a non-pension account. Exceptions apply to non-commutable pensions such as market-linked pensions and certain types of defined pensions.
In addition there are new requirements on the way the tax-exemption is calculated. If an SMSF is entirely in pension-phase for part of a year that part must be excluded from the tax-exemption certificate.
Also, the legislation has a new definition - Disregarded Small Fund Assets (ITAA 1997 s295-387). This definition targets superannuants with more than $1,600,000 in superannuation assets that are also members of SMSFs. An SMSF with at least one member that has more than $1,600,000 in superannuation assets cannot use segregation (ITAA s295-385) to formulate the taxation liability. This will apply even if that member holds less than $1,600,000 of their assets in the SMSF and isn't receiving a pension from that SMSF.