Changes to SMSF

July 11, 2011

One common tip around the end of year tax time is to transfer assets from outside super into a Self-Managed Super Fund (SMSF). Those who want to grow their super funds have the option of moving Business Real Property (BRP) into a SMSF, while only attracting a small stamp duty and little or no capital gains tax.

This might be useful if cash needs to be freed up to use as consideration of a transfer. It also avoids paying a high rent on business premises by buying the premises in a SMSF, and allows members to benefit personally from the high rental yield.

Be sure to first consider what a BRP is, given the recent ATO rulings:

  • The property must be individually owned, not by a company or trust.
  • The business use test must be satisfied, the BRP must be used ‘wholly and exclusively’ in one or more businesses.
  • Theremustbesomeelementofphysicaluseoftheproperty,actionsthatareconnected with its underlying business purpose.
  • Special rules apply to farmland, where up to 2 hectares can be used for a residence without prejudicing the definition of BRP.

It is vital to get advice to maximise tax savings before the end of June.