Tax effective superfund strategies

Last week, I was asked a question about purchasing an office building and what structure should be used. Now don’t forget every persons circumstances are different and we would need to consider your individual circumstances before offering the same advice.

This particular client was a young business that had been operating for about 4 years and had the opportunity to purchase the premises that they were currently renting. They called us to seek our advice before they went ahead with any decision. We ran through their financial situation both personally and for the business, and then looked at the clients Self Managed Superannuation Fund (SMSF) that we had setup some time ago.

Our client had been using this as a tax effective strategy to put money into super to save 15% in tax. Because of this, there was a build up of Super monies that we could access to buy their commercial property in the SMSF and lease it back to the trading business.

In my opinion this is one of the best tax effective strategies available to small business today. We even have clients at the moment selling their current business premises across to their SMSF. Yes, this is legal only if it is Business Real Property (commercial property it cannot be residential) and the best part is there is no stamp duty on the transfer.

While you will have to pay Capital Gains Tax (CGT) on the transfer, if you haven’t owned the building long this amount should be minimal and the other benefits should still outweigh this.

The other massive benefit bis that once you enter pension phase (aged 65) you can sell this property and pay no CGT.

That’s right – you can have a tax effective asset that is held safely in a SMSF, with no recourse from the bank (meaning they cannot sell or take any other assets to get their money back e.g. the loan is only secured against that particular property) and pay no tax when you sell it.

Why not call us now to find out more?

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