This is a good news story I wanted to share to give you an example of what can be done using a SMSF.
Client “Fred” wanted to buy a business property for $500k but didn’t have the funds – he had $200k in his SMSF and personal assets with equity to borrow. We set up a Unit Trust (UT) with the Superfund and Fred both purchasing units –
- Super Fund – cash $ 200k
- Fred – Loan from Bank $300k (Interest on the loan is tax deductible to Fred).
Fred’s business paid rent to the UT each year – getting a tax deduction. The UT distributed the profit in proportion to the units held.
The Super Fund paid no tax on its share. (Fred was receiving a pension as part of the planning).
Over the years, Fred moved his units into the Superfund (special rules allowed this provided stringent tests were passed – don’t try this at home without expert advice!) The Superfund paid Fred cash for the units transferred (out of the profit distributions and annual cash contributions).
Now the whole property is now “owned” by the Superfund – Fred’s business gets a tax deduction for the rent paid to the SF and the SF pays no tax on that rent (Wow – doesn’t get any better)….. and the growth in the property is also tax free!
There are clear directions in place as to who gets the property on Fred’s death – but in the intervening years it provides him with tax free income.
This is a great outcome and Fred is delighted!
If you want a part of this – or wish to know how a SMSF can be great for you – contact us for a chat.
(I am passionate about the opportunities for people – unfortunately I hear so many stories about people who have missed the boat or are paying heaps of tax because they just haven’t been educated about the possibilities. Hence this Blog and the hope I can change someone’s future!)
Hope this was useful.
At Green Taylor Partners (03 53824761) we have a dedicated team who specialise in all things SMSF!
We have hundreds of SMSF’s we already work with – we are a passionate SMSF team!
Client’s love their SMSF’s – make sure you don’t miss out on specialist planning strategies available from the team at GTP.