Financial advisers and their clients alike should consider transferring any business premises into their SMSFs as they begin to shift into pension phase, according to a sector expert.
The strategy worked to essentially reduce tax liabilities, NowInfinity principal Grant Abbott said.
“Why wouldn’t you use your super to go out and secure yourself a business property for your premises, particularly as commercial property is down but residential is up?” Abbott told the recent Succession Plus strategic planning conference in Sydney.
“If you’ve got a few investment properties that you’ve been building outside of super, it’s hard luck.
“The problem is you’re going to be paying tax for the rest of your life, but if those properties were inside your super and there was no gearing on it, effectively, how much tax would you pay? Zero.”
The Superannuation Industry (Supervision) Act allowed SMSFs to acquire business real property, which included farms, factories and offices.
Abbott said transferring business real property into an SMSF allowed trustees to turn their investments into positive cash flow by shifting assets around to maximise them.
“Any income or capital gains derived on your assets once you’re over 55 and in a pension are tax-free,” he said.
“You’ve got to get it into super.
“It’s silly not to get that income flowing into my super fund so that we will not be paying tax for the rest of our lives. That’s essentially where you want to go.”
