Benefits of Transferring business property to your SMSF & more on our Newsletter Summer Edition21-Dec-2015
Inside this issue
- Paul's Introduction
- Paul's Feareless Predictions for 2016
- Benefits of Transferring business property to your SMSF
- Cooking with Candice
It’s hard to believe it is Christmas time again as it seems we blinked and the year passed us by. It is only when you see your children reaching milestones that you realise you are getting older (my son is giving me more grey hair as he is now a P plate driver – drivers beware).
2015 has seen the use of technology improving efficiency in many industries. In accounting terms the use of software such as Xero has seen us revisit many services that were impractical to offer in the past. This is the future, where businesses need to keep revisiting what in the past was not possible, may be possible with the assistance of new technology, knowledge and systems.
2015 has witnessed one of our all-time favorite team members leave us. Rish was a valued team member for over 7 years however due to personal circumstances, he has taken steps in ensure the future for his family. The team at Simeoni misses him very much and he remains in contact regularly.
This year has seen the commencement of two new team members, Francesco and Harry. Francesco is a new arrival in Australia from Italy and he commenced as an intern in July this year. We were so impressed with his ability that he accepted our offer to join our team on a part-time while he completes his studies. Harry has only been with us for just over a month but has already fitted into our culture very well; please make them both feel welcome when you speak with them.
We would like to take this opportunity to thank all our clients for their support and goodwill during the year. We appreciate the quality of our clients and will continue to look for ways to improve our services.
Also a big thank you to our wonderful team at Simeoni, they continue to help make Simeoni what it is today.
We wish you a great Christmas and New Year and we look forward to seeing you in 2016.
Our office will be closed from: Thursday 24th December 2015 and the team will return Monday 11th January 2016. If you have any urgent queries during this period, please email us on: email@example.com.
Enjoy our Newsletter Summer edition.
Paul’s Fearless predictions for 2016 are...
Rish had an attempt at last year’s predictions and was able to achieve 4 out of 10 this year. Not bad for a rookie! I have taken over again for 2016 and these include the following:
|1) Michael Turnbull to win the Federal Election with an increased majority.|
|2) Australia to win between 8 - 10 gold medals at the Rio Olympics.|
|3) Interest rates will not increase during the year.|
|4) Australia’s GDP will be between 2.25% & 2.5%|
|5) Sydney FC to win the A league|
|6) An Australian will win a tennis or golf major in 2016|
|7) An Australian, Ben Simmons will be a 1st round NBA draft pick in 2016|
|8) Sydney Property prices to drop by at least 2%|
|9) Hilary Clinton will win the Democratic Party nomination|
|10) Prince Charles will be the new king of United Kingdom in 2016|
Rish 's Results for 2015 are...
|x||1) South Africa to win ICC Cricket World Cup 2015|
|x||2) NSW will win State of Origin again in 2015|
|x||3) Sea Eagles to win NRL Premiership 2015|
|v||4) Interest rates to receive further cuts 25 to 50 basis points in 2015|
|x||5) Julie Bishop would step down as Minister of Foreign Affairs|
|x||6) Japan to win ASIA Cup|
|v||7) Mike Baird will win NSW state election 2015|
|x||8) Andy Murray will win the 2015 Australian open|
|v||9) Brad Haddin will retire from test cricket in 2015|
|v||10) Australian Dollar to fall below $ 0.75 USD|
Benefits of Transferring business property to your SMSF
The most popular request over the past few years is to use your self-managed super fund (SMSF) to purchase property. The ability to ‘unlock’ funds accumulated in superannuation to invest in property.
One of the best strategies Simeoni has been able to assist clients with is the transfer of commercial property into a SMSF. The benefits could include the following:
- Tax rate of 15% (instead of a possible marginal tax rate of 47%) on net rent generated.
- Asset protection against creditors and potential bankruptcy.
- Potential exemption of any stamp duty on transfer of property.
- Capital gain tax of only 10% on sale of property.
- It can become a great investment strategy to increase personal wealth by paying rent to your SMSF (while receiving a 30% tax deduction in your company).
- The use and control of superannuation funds for the benefit of freeing up business capital.
In-specie property transfers
Contributions into superannuation don’t necessarily involve the transfer of funds. An in specie contribution of property can be performed. Maximum non concessional contribution for anyone under 65 is $180,000 p.a. or 3 year worth of $540,000.
If there are 2 people (i.e. husband & wife), maximum contributions can be $1,080,000. If your commercial property is valued less, then it can be contributed into a Self Managed Superannuation Fund (SMSF) as an in specie contribution.
Section 109 of the Superannuation Industry (Supervision) Act (SIS Act) requires that all investment transactions of an SMSF be made and maintained on an arm’s length basis.
Because of this requirement, the following must be prepared:
1) Independent valuation of the property
2) Rental appraisal report from an estate agent (since the property will be leased back to the client’s business)
3) Contract of sale of real estate
4) Vendor statement
5) Lease of real estate
6) Landlord’s disclosure statement
It is also important to ensure that the SMSF deed has the necessary provisions and powers to accept transfer of property as contributions.
In this particular case, the client wants to transfer a NSW property to their SMSF.
Transferring the property as an in-specie transfer will mean it is exempted from duty. Requirements for this are set out in section 62(a) NSW Duties Act 2000. This section broadly states that no duty will be chargeable in the report of a transfer of dutiable property if:
- The transfer is made without monetary consideration;
- The contribution is made to a complying superannuation fund; and
- There is no change in the beneficial ownership of the property.
Property can be purchased by a SMSF by either or a combination of the following
- In specie property transfer
- SMSF purchase out right property from funds accumulated with superannuation
- The SMSF borrowing money to purchase the property
A SMSF can only borrow through the use of a ‘bare trust’. A strategy accepted by the ATO in utilizing your SMSF to purchase your business property could save a large amount of tax over the years.
In one particular case a Simeoni client has been able to save over $1,000,000 per year in taxes.
This savings will help pay out the loan 10 years earlier than if kept in the client’s name. The end result is a faster wealth accumulation strategy.
If you would like to know more about strategies of property and SMSF, please contact our office for an appointment.
Cooking with Candice - Enjoy!
ITALIAN CHILLI BEEF SALAD
- 250 grams baby rocket, washed and dried
- 500 grams Rump steak
- 8 semi-dried tomatoes, halved
- 100g fresh mushrooms, washed and cut into quarters
- 1/2 tbspn Lightly Dried Chilli
- 1 tbspn Garlic Stir-In Paste
- 1/2 tablespoon Oregano Stir-In Paste
- 4 tablespoons olive oil
- 2 tablespoons white balsamic vinegar
- pitted black olives
- shaved parmesan
Cut the beef into thin strips, cut across the grain
In a small bowl, mix together the garlic, chilli, oregano, salt, and pepper, with the white balsamic vinegar.
Lastly, add the olive oil. Stir well Seal in a hot pan for 3-4 minutes
In a large hot frying pan, seal the beef in oil in small quantities for approximately 3-4 minutes each, transferring small amounts to a plate to keep warm while cooking remaining beef
Toss the cold ingredients in a bowl, and add the dressing
Arrange salad in a serving bowl and top the salad with the tender beef strips.
Contact us now to see how our accounting experts can help.