Using SMSF Income Losses

Using SMSF Income Losses

Occasionally we come across Fund’s with large carried forward income losses. These are generally due to a failed investment or a future service benefit deduction. Some of these, particularly in the latter case, can easily be more than a $million.

Losses can be applied against the Funds taxable income including investment income, not attributable to tax exempt pension earnings, and concessional contributions so such funds may not pay tax for many years, even if in accumulation only.

Be careful though. Income losses are wasted by tax exempt pension accounts as losses are applied to taxable income before the tax exemption is applied. Consideration should be given to rolling pension accounts to another fund to avoid this.

Remember that losses attach to the Fund, not the member, so they can benefit members who join the Fund after the losses have been incurred.