There are some effective, and often quite simple, strategies to reduce the tax payable in an SMSF that many fail to take advantage of.
Nomination of beneficiary
Those who nominate a spouse, child or financial dependent as a beneficiary may avoid paying tax on a lump sum death benefit.
Delaying TTR commencement
Members looking to begin a transition to retirement pension in their late 50s may delay this decision until age 60. The benefit of waiting is that members avoid being taxed on super fund pension payments. This strategy may be particularly useful for members who are still working or have other taxable income outside super.
This strategy involves taking lump sums or pension payments with a high taxable component out of a fund and replacing them with tax-free non-concessional contributions. It is important that the non-concessional contribution is separated from the taxable components in the accumulation balance to avoid losing the benefit of the re-contribution.
Lump sum withdrawals
This solution is suited to members who have a short time to live. They can withdraw all assets from their super fund and their children can avoid any tax upon death. The catch is that if they live longer than expected, they may not be able to transfer the money back into their super account.