It’s common to see Australians wanting control over their superannuation. This means people are looking increasingly towards Self-Managed Superannuation Funds (SMSF) – a trust structure that is becoming the preferred choice of many. Below, we analyse the benefits of an SMSF and consider how it relates to business tax.
1. Choice of investment
A significant benefit is control over your investment. This also means wider investment choices and access to derivatives, providing downside protection.
2. Borrow to invest in property
Rules state that SMSFs are allowed to borrow. Members can take advantage of this by purchasing significant assets such as commercial property. A limited recourse loan can be accessed for 60%-70% of the purchase price. These loans are becoming more difficult to obtain as the major banks no longer offer SMSF loans.
3. Minimising your tax
This advantage reaps the rewards for your business tax. A SMSF’s tax rate is much lower and gives you more flexibility than other superannuation structures.
4. Control of tax
Another advantage for your business tax is that it can be reduced. This works well for the retirement phase, with repayment claims often made to the ATO for any excess imputation credits.
5. Insurance and your SMSF
A fantastic thing about an SMSF is that it can be used to pay for certain types of insurance. This includes insurance such as:
- Life Insurance,
- Income Protection Insurance,
- Total and Permanent Disability Insurance (TPD).
6. Small to no CGT costs
Another benefit to business tax and other tax is that the SMSF means you can have an easy change from the ‘earning’ phase to the ‘pension’ phase, without the need to sell assets. This change does not trigger the Capital Gains Tax (CGT).
7. Transfer of wealth
SMSFs offer plenty of benefits when it comes to the control and flexibility of an estate plan. This will secure the funds and get the money to the right people, with the most effective tax benefits.
8. Asset protection
Asset protection is often a crucial aspect for business owners who care about business tax and securing their assets. Superannuation is a system that protects members from litigation and bankruptcy.
Whether you are concerned about business tax or the assets you hold, Self-Managed Super Funds are popular because they work and offer significant advantages. Reach out to Accountants 2 Business today to learn more.
The information in this article is general in nature and might not be right for your circumstances. Please arrange a meeting with one of our Accountants to discuss your particular needs. Accountants 2 Business Ph (07) 3823 2344
