Self-managed super funds and tax exemptions on pension assets

You may be able to claim a tax exemption in the SMSF annual return for certain income, once your SMSF commences paying super income stream benefits (commonly referred to as pensions).

When are you eligible to claim this tax exemption?

Ordinary income and statutory income that a complying SMSF earns from assets held to provide for super income stream benefits is exempt from income tax. This is referred to as exempt current pension income (ECPI).

The ECPI exemption can be claimed by all complying super funds (including SMSFs) currently paying super income stream benefits. However, an SMSF paying such a benefit is not automatically entitled to the exemption - it must meet certain other conditions.

To claim the ECPI exemption in the SMSF annual return, there are steps you must take prior to commencing the payment of the super income stream benefit, such as ensuring that all of the SMSF's assets are re-valued to their current market value. For further information, refer to Running a self-managed super fund (NAT 11032).

    Last modified: 13 Apr 2015QC 21546