What you should have.
- You or a related entity owns the property your business operates from
- Superannuation Balances of $150,000 or greater
How it Works.
- Your superannuation balance (and your partner’s), are rolled into a Self-Managed Superannuation Fund (SMSF). You are trustee and in control of the SMSF.
- The Superannuation Fund (utilising a Bare Trust) borrows sufficient funds to enable it to purchase your business property.
- The property is purchased and the funds transferred to you to invest as you wish.
- Rent is now payable by the business to the superannuation fund.
Why is this Fantastic?
- The balance of your superannuation fund (less costs of the transaction) is now in your hands and able to be utilised to reduce debts, invest in the business or other opportunities which may not be permitted if these monies were held in a superannuation fund
- Rent is now payable to the superannuation fund and you can fund your superannuation faster than otherwise possible
- There should be significant tax advantages as the net rental income is likely to be taxed at 15%.
- As less tax is being paid, more funds are available to reduce debt, therefore the debt can be repaid quicker.
- Should you reach retirement age and draw a pension from the superannuation fund, it is possible that the tax rate on future net rental income will be NIL and any capital gain made on the sale of the property may also be free of income tax
What are the disadvantages?
- There are several costs involved in the transaction (including establishing SMSF, Bare Trust, Stamp Duty and Legal costs transferring the property, possible Capital Gains Tax and Others)
- The superannuation fund regulations are complicated and we strongly recommend you OBTAIN PROFESSIONAL ADVICE on your specific circumstances before entering any arrangement