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How do super funds get a tax refund?

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I heard that some super funds get a tax refund — is this true and how does it happen?

Some people with a self-managed super fund will buy stocks that pay fully franked dividends. These dividends have paid the company tax rate of 30 per cent but a super fund only pays tax at 15 per cent and so once the super fund’s tax bill is worked out, you deduct the tax paid on the shares the fund holds and the difference can be a tax refund to the super fund.

This is why many people in a self-managed super fund will buy dividend-paying companies where the dividends are fully franked. This is a reason why some investors won’t buy overseas stocks as you cannot access fully franked dividends. The tax considerations are important to understand when it comes to a self-managed super fund.

For advice you can trust book a complimentary first appointment with Switzer Financial Services today.

Important information: This content has been prepared without taking account of the objectives, financial situation or needs of any particular individual. It does not constitute formal advice. For this reason, any individual should, before acting, consider the appropriateness of the information, having regard to the individual’s objectives, financial situation and needs and, if necessary, seek appropriate professional advice.

Published on: Wednesday, September 21, 2011

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