SMSF Newsletter #2: Stock Investments

November 19, 2022

Your Scenario:

You have reached your preservation age and retired, and your SMSF invests in two (2) stocks, one being Australian listed share of Westfarmers Ltd and another US listed share of Apple Inc.


Are the biannual fully franked dividends issued by Wesfarmers to my SMSF taxable incomes?



Tax Tip:

Scenario 1:

You have commenced an account-based pension making your SMSF eligible for Exempt Current Pension Income (ECPI), resulting in dividend incomes received by your SMSF being tax free. Corporate tax paid by Wesfarmers will also be fully refundable (in cash) to your SMSF by virtue of franking credits.

Scenario 2:

Your Apple stocks have gone up in value by 25% over the last five (5) years, you have sold them as you deem the company is overvalued. Capital gains realised by your SMSF will also be tax free by the operative provisions of Exempt Current Pension Income.

Common Traps:

For the above scenarios to take full effects, your Transfer Balance Cap (TBC) must be within $1.7M.

Your 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.


GW Capital Group Pvt Ltd General Advice Warning: This advice may not be suitable to you because it contains general advice that has not been tailored to your personal circumstances. please seek personal advice prior to acting on this information.

By Admin

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