Hello Chasers,
If you have or are thinking about getting a Self-Managed Superannuation Fund (SMSF) to grow your retirement benefits there are a couple of things to know about buying assets from yourself as a member or from associates related to you.
SMSFs cannot acquire an asset from a ‘related party’ (such as a member or their spouse or relative) unless it is acquired at market value and is:
- a listed security (e.g., shares, units or bonds listed on an approved stock exchange);
- ‘business real property’ (broadly, land and buildings used wholly and exclusively in a business);
- an ‘in-house asset’ as defined, provided the market value of the SMSF’s in-house assets does not exceed 5% of the total market value of the SMSF’s assets; and/or
- an asset specifically excluded from being an in-house asset.
If the asset is acquired at less than market value, the difference between the market value and the amount actually paid is not considered to be a contribution. Instead, income generated by the asset will be considered ‘non-arm’s length income’ and will be taxed at the highest marginal rate.
Whilst an SMSF is not for everyone, there are significant advantages for using them but as with everything involving tax, make sure you get expert advice BEFORE you do anything – it’s cheap insurance against costly financial mistakes!
Have a great day!
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