The supervisory levy is an annual payment that all SMSFs must pay to the Australian Taxation Office (ATO).
How much is the ATO levy?
Currently, the annual SMSF levy is $259.
However, it’s important to note that this levy must now be paid in advance (i.e. for the following financial year). Prior to 1 July 2013, the SMSF ATO levy was payable in arrears (i.e. for the current financial year).
The advance payment system means that newly-registered SMSFs must pay double the ATO levy in their first year of operation (i.e. $518, which is the $259 levy for the financial year in which they register, plus $259 for the following financial year). This amount is payable even if the SMSF was only registered part-way through its first financial year.
An SMSF is classed as being legally established (and therefore must be registered with the ATO) in the year in which it first has assets set aside for its members. In other words, when it first receives fund member contributions and/or their asset rollovers.
An SMSF does not have to pay the annual ATO levy in the year in which it is wound up. That’s because it will have already paid for that year under the ATO’s current advance payment system.
In summary, an SMSF’s levy depends on the following factors:
- whether it is an existing fund.
- whether it has been newly registered in the current financial year.
- whether it has been wound up in the current financial year.
|Type of SMSF||ATO supervisory levy payable|
|An SMSF registering for the first time||$518|
|An existing SMSF that is not wound up in the current financial year||$259|
|An SMSF that is wound up in the current financial year||Nil|
The latest ATO statistics reveal that there are more than 600,000 SMSFs currently operating in Australia. The current annual levy of $259 therefore raises more than $155 million per year for the ATO.
How and when is the SMSF levy charged?
The annual levy must be paid by an SMSF when their annual return is submitted to the ATO. SMSF trustees are responsible for lodging an annual return on behalf of their fund as part of their compliance obligations.
The levy is added to the tax payable by the SMSF for member contributions and fund earnings (or deducted from any tax refund that an SMSF may be entitled to receive). It’s important to note that the levy is payable even if the SMSF has no tax payable on member contributions or fund earnings.
The due date for an SMSF’s annual ATO return is generally 28 February in the following financial year if you prepare the return yourself as a fund trustee. However, if you use the services of a tax agent, this date may vary.
Failure to lodge your SMSF annual return date by the due date can result in ATO penalties being imposed on fund trustees and/or the loss of the fund’s tax concessions. Super funds in Australia (including SMSFs) are eligible for tax concessions. Member contributions and fund earnings in compliant SMSFs are taxed at the concessional super rate of 15%, up to certain contributions limits.
Why is the levy charged?
The levy helps the ATO to:
- Educate SMSF members/trustees about their legal compliance obligations.
- Regulate SMSFs. SMSFs must have their operations audited each year by an ASIC-registered auditor, who must report any non-compliance issues to the ATO. The ATO can impose a range of penalties on SMSFs who are deemed to be non-compliant.
Is the ATO SMSF levy tax-deductible?
Yes, the full amount is tax-deductible.