SMSF investors wanting to make a contribution to their fund can use shares as an in-specie transfer, but have been advised to consider the impact on their tax and contribution cap positions.
Creation Wealth director and senior financial adviser Andrew Zbik said investors can continue to hold the shares, but move the ownership into the superannuation environment, and if transferred at a lower market price than initially paid, an individual can avoid any capital gains tax.
“The market volatility and uncertainty during the past year and a half of COVID-19 have many share investors understandably rattled,” Zbik said.
“However, this may present a smart opportunity for investors nearing retirement in the next five years.
“Most superannuants are able to draw an account-based pension from their superannuation fund tax-free.”
He noted an in-specie transfer will be classified as a capital gains event when shares from the individual are sold at a higher purchase value to the superannuation fund.
“If you are transferring the shares at a loss, it means you will retain that loss on your tax return, which can be used to offset future capital gains,” he said.
“So, for some, it may be an opportune time to contribute these shares to your superannuation fund to allow future gains to be made in a concessional tax environment that is superannuation.”
Members interested in this strategy are advised to select a specific date to transfer shares and notify the share registry of their true value within 28 days.
In addition, Zbik warned transferring shares into a superannuation fund will most likely contribute towards the non-concessional contribution cap of $110,000 or the $330,000 of bring-forward contributions available to SMSF members aged under 67.
“Ultimately, one would only use this strategy if they anticipate to continue holding these shares for the long term,” he said.
