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The example below shows the advantages of investing in an SMSF versus in your own name. In this example the client is 50 years old and has just set up his own SMSF. He recently sold an investment property or had a similar windfall and is deciding whether to make a $400,000 after-tax (non-concessional) contribution to his SMSF rather than invest it directly in his own name. For this example, the client is on the highest marginal tax rate. They want to invest the $400,000 into a portfolio of listed shares that pay high levels of franked dividends and expects the shares to return a fully franked dividend yield of 5%.





Client’s SMSF

Client’s Individual Name

Dividend’s Income



Franking Credits (fully franked)



Amount Included in Assessable Income



Tax Rate



Tax Amount on Dividends at Marginal tax rate



Less Franking Credits



Net tax



Tax Paid on dividend

Nil- SMSF may receive a refund as per above = $4,822

A further $5,304 is required to be paid in tax.

Tax savings



Increased Retirement Funds in 10 years – Compounded at a rate of 5.5%.


Given the shares will be sold to service a pension. This value is further magnified when you take into consideration Capital Gains Tax (CGT). Assets that are sold in the pension phase do not attract CGT in the pension phase.















Important Information: The content of this article is not a recommendation and has been prepared without taking account of the objectives, needs, financial and taxation situation of any particular individual. For this reason any individual, before acting on the content, should consult a Birchcorp Financial Planner for Personal Advice.


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