Published on March 18, 2014
www.lasseter.com.au firstname.lastname@example.org 083 691 Gearing in SMSF
www.lasseter.com.au email@example.com 083 691 Lasseter has prepared this presentation for general information purposes only and does not constitute personal advice. You should not act solely on the basis of material contained in this presentation.We recommend that formal advice is sought which considers all your individual objectives and needs. No material contained within this report should be construed or relied upon as providing recommendations in relation to any financial product. General Advice Disclaimer
www.lasseter.com.au firstname.lastname@example.org 083 691 • As a result of the amendments in September 2007 to the Superannuation Industry (SIS) Act 1993, it is now possible for a regulated superannuation fund to borrow to acquire a property under strict specific conditions. • In order for a borrowing to qualify for the exception in s.67 (4A) it is crucial that: o The asset acquired is not one that the super fund is prohibited from acquiring o The asset is held on trust for the super fund so the trustee acquires a beneficial interest o The super fund has the right to acquire legal ownership of the asset by making one or more further payments o The rights of the lender, should the super fund default on the loan are limited to rights relating to the original asset • Currently there are funding options to gear into the following assets: o Property o Listed shares o Managed funds SMSF Gearing Opportunity
www.lasseter.com.au email@example.com 083 691 • Residential o Members or related parties are prohibited from living in the premises o Members are able to purchase the property to live in after their retirement subject to a number of conditions. • Holiday or Student Housing o Subject to lenders requirements • Commercial Property o Members are allowed to operate their business from the property subject to arms length residency agreement. Types of Property
www.lasseter.com.au firstname.lastname@example.org 083 691 LENDER SMSF TRUST YOUR COMPANY BUSINESS PREMISES Loan Repayments Contributions Rent LeaseLimited Recourse Features of a SMSF Purchasing Property
www.lasseter.com.au email@example.com 083 691 Advantages •Asset protection (Asset in SMSF not business) •Negative cashflow comes from super e.g. 9% SGC (limits) •Frees up cash held in Superannuation that can used for the business. •CGT on sale lower 10% or nil after age 60 •Income Tax benefits 15% •Interest rate are at commercial rates •Saving for retirement Disadvantages •Associated costs •Complexity •Over exposure to property •Needs cashflow in fund to meet loan repayments – issue in retirement Pro’s and Con’s
www.lasseter.com.au firstname.lastname@example.org 083 691 Summary •ABC Pty Ltd (family business) •Currently renting business premises •Current super • Dad $250,000 • Mum $70,000 Case Study
www.lasseter.com.au email@example.com 083 691 • Set up SMSF & role current super into fund ($320,000) • Purchase factory for $800,000 • Borrow 65% - $520,000 • Rent factory to A & B P/L at 8% - $64,000 • Loan over 15yrs @ 9.5% • SMSF uses rent to make loan repayments – $65,160 • Property growth at 3% Outcomes • Tax benefits Between $9,600 - $19,200 • Asset protection • Saving for retirement • Reduce CGT or in pension mode tax free Case Study
www.lasseter.com.au firstname.lastname@example.org 083 691 Year Value Loan Net Equity $800,000.00 $520,000.00 $280,000.00 1 $824,000.00 $503,536.35 $320,463.65 2 $848,720.00 $485,438.66 $363,281.34 3 $874,181.60 $465,544.74 $408,636.86 4 $900,407.05 $443,676.30 $456,730.75 5 $927,419.26 $419,637.38 $507,781.88 6 $955,241.84 $393,212.56 $562,029.28 7 $983,899.09 $364,165.02 $619,734.07 8 $1,013,416.07 $332,234.45 $681,181.62 9 $1,043,818.55 $297,134.72 $746,683.83 10 $1,075,133.10 $258,551.26 $816,581.84 11 $1,107,387.10 $216,138.32 $891,248.78 12 $1,140,608.71 $169,515.81 $971,092.90 13 $1,174,826.97 $118,265.93 $1,056,561.04 14 $1,210,071.78 $61,929.40 $1,148,142.38 15 $1,246,373.93 $0.00 $1,246,373.93 Case Study
www.lasseter.com.au email@example.com 083 691 • Establishment Costs – FREE (Lasseter will establish your SMSF at no cost) • Corporate Trustee - $444 (One Off – ASIC Fee) see our SMSF Starter Package • Annual Accounting and Tax – starting from $1320, see our Compliance and Administration Package • Annual Audit – starting from $330 * • Annual ATO Levy - $150 • Annual ASIC Fees - $212 (only for corporate trustee) • Other Professional Fees – ie Financial Advisor • Investment Fees – depending on investments chosen What are the Costs?
www.lasseter.com.au firstname.lastname@example.org 083 691 If you have any queries please call us on 1300 083 691 or We can contact you request via our website press here View our SMSF Starter Package View our Compliance and Administration Package What Next?
www.lasseter.com.au email@example.com 083 691 Lasseter InFocus Offices: T: 1300 083 691 Melbourne Altona E: info@Lasseter.com.au Geelong W: www.Lasseter.com.au
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