Investing in Australian shares in a SMSF can be a great option, due to additional available franking credits.
Franked dividends are dividends or profits paid to shareholders by a company that's paid company tax in Australia on part or all of the profit being distributed as a dividend.
Generally a listed company will pay tax at a rate of 30 per cent. A shareholder who receives a franked dividend is able to claim a tax offset for the franking credits – otherwise known as imputation credits – attached to the franked dividend.
In practice, this would mean that if your SMSF owned BHP shares, and a $1,000 dividend was declared, you would receive $700 as cash and BHP would pay $300 (30%) in tax. If your SMSF is in pension mode on a 0% tax rate, you would then receive the $300 tax as a refund when you lodge your tax return.