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Technical And Strategic Assistance
- Concessional (tax deductible) contribution to a Super Fund can be transferred to a spouse by splitting
- ETP payments (Eligible Termination Payments)
- Taking advantage of receiving the lifetime lump sum low rate NIL tax payment threshold and recontributing this back to the Super Fund as a non concessional personal (undeducted) contribution.
- Rollback of existing pension into Super Fund and then commencing a new pension.
- Any strategies to be adopted including
- Splitting Superannuation contributions to the benefit of a spouse.
- Commencing a market linked or growth pension
- Other tailor made strategies depending on individual circumstances.
- Purchasing of property/ property development depending on circumstances this may be acceptable and can result in excellent benefits
to a DIY Super Fund with opportunities to minimizing both capital gains tax and taxation.
Example
Strategies Utilise Your Super Fund Money To Buy Property
Examples/ Strategies
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| a) |
- Your Super Fund buys a rental property for $250,000.00. Is it a proper investment for the Super Fund to have all of it's assets in one property?
- The taxation office has answered 'yes'
- Super Fund has only $125,000.00 available to buy the $250,000.00 investment property, i.e. 50%
- It can be purchased as tenants in common with someone else or others.
- This could include the trustee and/ or members of the Super Fund.
- These others could borrow on other assets, including the family home, to purchase the other 50%.
- The rental income and expenses split 50% to the Super Fund and 50% to others.
Note:
- The others cannot borrow on the investment property to secure their borrowings, as Super Fund assets cannot be borrowed on.
- It could be 10% owned by Super Fund and 90% by others, or 60% Super Fund and 40% by others.
- When the Super Fund accumulates more money it could purchase more of the property off the other joint tenants, if it was business real estate (non residential property).
It cannot do this if it is a residential property and the others are related.
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| b) |
There are other possible strategies including developing property depending on individual circumstances.
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| c) |
Business is carried on as a trust or Pty Ltd company. (Different considerations for a partnership).
- It owns a property value $300,000 that is used in the business.
- Business income including wages is about $120,000 per year.
- Super Fund is formed and buys off the business 20% ($60,000) of the property by way of a super contribution from the business operator.
- The business operator claims a concessional (tax deduction) contribution for $60,000 each year for the next 4 years another $60,000 is paid until the property is purchased in full.
(Note: more may need to be paid if the property increases in value over the period).
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Note: Stamp duty and conveyancing fees must be paid each year the property is transferred.
Presume the business was a discretionary trust and a half of income distributed each to husband and wife, so taxable income each $60,000.
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Husband |
Wife |
Superfund |
Total |
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| Before year 1 income |
$60,000 |
$60,000 |
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| Tax |
$13,425 |
$13,425 |
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$26,850 |
| Superfund - transfer say June Taxable income reduced to by Super Fund contribution of $60,000 |
$30,000 |
$30,000 |
$60,000 |
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| Tax |
$3,560 |
$3,560 |
$9,000 |
$16,120 |
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| Savings |
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$10,730 |
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| Year 2 |
$30,000 |
$30,000 |
$60,000 |
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| Rent to Super Fund 7% |
-$ 2,100 |
-$ 2,100 |
-$ 4,200 |
$26,850 |
| Taxable income |
$27,900 |
$27,900 |
$64,200 |
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| Tax |
$3,129 |
$3,129 |
$9,630 |
$15,888 |
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| Savings |
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$10,962 |
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- Strategies are individual
Technical and Strategic Assistance
- Commencing pensions
- Commencing a non commutable allocated pension over 55 while still working and salary sacrifices into Superannuation to reduce your tax to as little as 15%,
while at the same time possibly becoming eligible for the $1,500 tax free government co-contribution subsidy.
The Trust deed must be reviewed and possibly updated to ensure that the fund member can take advantage of this strategy.
- Intending Retirees
People who are intending to retire can roll their super into their own DIY Super Fund and enjoy the benefit of DIY Super.
There can be tax and other advantages of doing this well before retirement.
- Commutations from pensions can have taxation consequences and need to be properly considered.
- Restructuring of pensions can be beneficial in some cases.
- Special Consideration
Effect of partial pension commutation on Centrelink pension.
Effect of previous indexed lump sum benefits received on RBL.
Invalidity components in Superannuation.
Tax deductions available to a fund that pays out an amount from revenues in addition to the account balance of the members to dependants.
(Anti detriment provisions, Section 279 D).
Tax deduction to a Super Fund paying out a death or total disablement benefit for employed fund member. (Not applicable to self employed).
The level of untaxed post component created by paying a death benefit with life insurance to a non dependant.
Avoidance of capital gains tax in a pension paying fund when death of a member is near and or likely by realizing assets prior to death.
Arranging insurance with a DIY Super Fund .
Risk insurance (life total and permanent disability) can be taken out, however trauma insurance is not suitable as it is not a tax deduction.
It can be more effective paying for your risk insurance through the DIY Super Fund as your Fund obtains a tax deduction, whereas no tax deduction is available if paid personally.
Concessional tax deductible superannution contributions for those between 65 and 75, and non concessional personal (undeducted) contributions can be made between 65 and 75 providing a person is eligible to make super contributions by meeting a work test.
Crea & Co Pty Ltd is ready to assist you in offering our specialist advice in these areas and ensuring that you comply with appropriate minutes,
taxation office requirements including lodging the relevant tax office forms.
Information Request Doc
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