Man­ag­ing your SMSF

Southern Riverina news - - Taxation And Financial Planning -

KNOW­ING what as­sets your Self Man­aged Su­per­an­nu­a­tion Fund (SMSF) can own is an im­por­tant part of be­ing a fund trustee.

You should also know what as­sets your fund can ac­quire from you or re­lated par­ties.

New rules re­cently in­tro­duced may give more scope for your SMSF to bor­row funds to ac­quire these as­sets but there are unique rules and guide­lines that need to be ad­hered to.

As the trustees of your SMSF, you need to en­sure that all as­sets held in the fund are con­sis­tent with the fund’s in­vest­ment strat­egy.

That is, as trustee you need to con­sider is­sues such as risk and re­turn, diver­si­fi­ca­tion of the fund’s as­sets, liq­uid­ity within the fund, and of course, the abil­ity of the fund to dis­charge li­a­bil­i­ties.

Fol­low­ing are the com­mon ques­tions we’re of­ten asked about bor­row­ing.

Can I move my ex­ist­ing rental prop­er­ties into my SMSF?

If these are res­i­den­tial prop­er­ties, then in most cases the an­swer is no.

Your SMSF can not ac­quire prop­erty from a ‘re­lated party’ un­less the prop­erty is used in a busi­ness (called busi­ness real prop­erty).

A re­lated party

in- cludes you, your rel­a­tives, and in some cases your busi­ness as­so­ciates.

It can also in­clude en­ti­ties that are con­trolled by these peo­ple.

Can I own my busi­ness premises through my SMSF?

As­sum­ing that the pur­chase of a com­mer­cial prop­erty makes sense for the fund, there is noth­ing to pre­vent the fund from pur­chas­ing a com­mer­cial prop­erty.

The fund could even ac­quire the ex­ist­ing busi­ness real prop­erty from a mem­ber or re­lated party!

Your SMSF could then lease the prop­erty back to your busi­ness so long as the lease is on com­mer­cial terms.

This could be a great way to boost your re­tire­ment sav­ings as the rental in­come is taxed at a max­i­mum of 15 per cent.

Can my SMSF bor­row money to buy prop­erty?

Since Septem­ber 2007, SMSFs have been able to bor­row to ac­quire as­sets.

It’s im­por­tant to recog­nise that as there are strict rules sur­round­ing this, you should al­ways seek pro­fes­sional ad­vice.

Your SMSF can only bor­row to ac­quire as­sets that it would other­wise be al­lowed to ac­quire - so in some cases your SMSF could bor­row to ac­quire the mem­ber’s busi­ness premises.

Be care­ful though as the SMSF can not use the bor­row­ings to im­prove the prop­erty (no ex­ten­sions or ren­o­va­tions), so what you buy is what you’re stuck with un­til your SMSF has paid off the loan.

■ If you re­quire any fur­ther in­for­ma­tion, con­tact Adam Pur­till at the Stubbs Wal­lace of­fice in Fin­ley, on 5883 1477, who will at­tend to your en­tire self man­aged su­per­an­nu­a­tion fund needs.

Adam Pur­till at Stubbs Wal­lace in Fin­ley is here to help with all your Self Man­aged Su­per­an­nu­a­tion Fund re­quire­ments.

Newspapers in English

Newspapers from Australia

© PressReader. All rights reserved.