Client Case Studies

• Case Study 1: Husband & Wife

  The Situation Jim (45 years old) and Rachel (43 years old) Both members and trustees of the JR Superannuation Fund Each has a Super balance of $100,000 They want to accumulate more as they are far off from retirement They maintain the ability to maximise their superannuation contributions of up to $25,000 each. The Solution After seeking advice, Jim & Rachel implement the following strategy: The fund borrows $350,000 This is used to acquire a residential property with a value of $500,000 The balance of the purchase price of the property is funded by existing cash in the JR Superannuation Fund The Outcome Jim and Rachel plan to hold the asset until they reach pension phase.  Any income derived from the property at that time will be tax-free to their super fund, and no CGT will be payable when they sell it. They will continue to seek advice to ensure this strategy is still appropriate. Upon retirement, Jim and Rachel will have significantly increased their ability to maximise the funds available to them.

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• Case Study 2: Business Owner (John and Jane)

  The Situation As business owners John and Jane want to borrow to transfer a commercial premise to their SMSF.  When they do this they have the ability to utilise various super and tax strategies to reduce or eliminate any CGT (Capital Gains Tax) and by correctly structuring their debt arrangements they can also eliminate existing non-deductible debt.  These net proceeds can then be used for working capital within their business. The Family Business – Engineer Pty Ltd Business premises (Factory) held in Family Trust with a value of $600,000. Factory has a deductible debt of $200,000. There is a rental agreement in place between the business and family trust. The Family Home Value of $700,000 with non-deductible debt of $300,000 This property can potentially be used as business security The Solution & Outcome for John & Jane The SMSF borrows money and holds the commercial property via Bare Trust. Transfer of the Business Real Property into the SMSF (therefore No CGT payable, and asset is treated as a ‘going concern’) Family Trust receives $600,000 – which is used to payout the Factory debt of $200,000. John & Jane payout $300,000 home loan (which is non-deductible debt) A further $100,000 can be invested, or contributed back into Super or used as working capital within the business. 100% deductible debt for SMSF, being made from deductible super and rental payments in the business, and future growth of property will become CGT exempt (if property is sold post-retirement). If you want one of our SMSF expert advisers to help you to borrow money within your SMSF please contact us.

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This is general advice only and does not take into account your financial circumstances, needs and objectives. Before making any decision based on this document, you should assess your own circumstances or seek advice from a financial adviser and seek tax advice from a registered tax agent. Information is current at the date of issue and may change.