Franking Credits are Super for your SMSF

One of the advantages of operating a self managed super fund (SMSF) is the ability to purchase investments that pay franked income. Being able to pick and choose your shares to ensure both maximum tax efficiency and a diversified portfolio is one of the big selling points of managing your own superannuation fund.

Franking credits from dividends can eliminate or reduce the tax you have to pay on your SMSF’s earnings, including any capital gains your fund may receive. The key issue around imputation credits is the fact that the income tax rate for super funds is only 15%, while imputation credits from fully franked dividends can be as high as 30% of the gross dividend. This means that the imputation credit accounts for the tax payable on the dividend received and leaves an excess to be used to reduce the other tax payable by the fund.

For example, consider a SMSF that holds BHP and CBA Shares:
Dividend Imputation Credits Taxable Income

SMSF franking credits

In this example, if there is no other income to be offset, the fund will receive a refund of $471 from the ATO.
An important fact to note here is that a SMSF must hold the company shares for at least 45 days (plus the day of purchase and day of disposal) to be entitled to franking credits. The 45-day rule applies to SMSFs regardless of the amount of franking credits. $5000 ceiling exemption applied to individuals (45-day rule does not apply to INDIVIDUALS whose total franking credit entitlement for a financial year is below $5000) does NOT apply to SMSFs because a SMSF is not a natural person.

How SuperHelp can Help ?
Superhelp can help you in the setup and annual administration of your SMSF so you can start investing in your own SMSF today!
Please call us for more information on 1300 736 453.

 

Article Disclaimer: This information should not be considered personal financial advice as it is intended to provide general advice only. The article has been prepared by Superhelp Australia Pty Ltd without taking into account your personal objectives, financial situations or needs. 
 
The information contained in the article may not be appropriate to your individual needs therefore you should seek personal financial advice before making any financial or investment decisions. 

 

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Book your free consultation with me to find out if SMSF is right for you. If you have any other questions, we are happy to help!

 

Sandra - SMSF Advisor

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Why is SMSF Set up free at SuperHelp?

SuperHelp have been servicing the SMSF market for over 15 years. We pride ourselves in being able to provide an affordable SMSF service without compromising on quality. One of these services are to provide new members with setting up their SMSF for free when they use our award winning service.

Do I need to use a specific bank, broker or provider?

Unlike other SMSF administrators and accountants we do not restrict you to what bank, broker or service provider you use. We are independent and do not take any commissions from other parties so that our clients can invest their super where they please.

How long has SuperHelp been around for?

SuperHelp have been around since 2002 – so over 15 years! While new SMSF administrators have come and gone, we are still around!

I'm not sure if I want to start an SMSF, what should I do?

Starting an SMSF should not be taken lightly, we encourage you to book a free SMSF consultation with one of our expert staff to find out if SMSF is right for you. You can book a suitable time here or feel free to give us a call on 1300 756 453 during business hours.

How much is your ongoing annual administration fees?

Our first year introductory offer for new SMSF or transferred SMSF are $899 + GST regardless of asset types. Subsequent years are dependent on the number of assets and asset types you have – please use our calculator to estimate your fee. You will find that our fees are very reasonable to the quality provided within the SMSF market.

Do you have an SMSF newsletter that I can sign up to?

Yes! We send out a quarterly SMSF newsletter to all of our clients and anyone interested in SMSF. You can sign up here :

Do you offer any other SMSF services?

Yes we do! You can see a full list of SMSF services on our services page.

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SuperHelp is located in Macquarie Park, NSW however we work with clients all around Australia.

1300 756 453

PO Box 1906 Macquarie Centre NSW 2113

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