What assets can an smsf member use as an in specie contribution to their fund

Most superannuation funds , but more specifically self-managed super funds (SMSFs), allow for ‘in specie contributions’ – in specie meaning ‘in its present form’, occuring when a contribution of something other than cash is made to the fund. An in- specie contribution occurs when a member transfers ownership of an asset they own to the SMSF. What is SMSF in SMSF? In this case, the capital value of the fund has increased and the increase in value is considered a contribution for the member whose member balance has grown. A non-cash benefit payment is called an ‘in specie benefit’.

So instead of paying the member in “cash” the benefit is paid by transferring an SMSF asset to the member. This is often shares and real estate. And of late, often a country estate or a holiday type property. You fund can buy listed shares from you but an alternative option often considered is making an in specie transfer to your SMSF of those shares. In specie is the process of transferring shares, business real property or managed funds without selling the underlying investment.

In-Specie Contributions There are two ways for an asset to move into your SMSF. The trustee can either buy the asset. Or the trustee can receive the asset as an in-specie contribution. An in - specie contribution occurs when a member transfers ownership of an asset they own to the SMSF.

When a member ’s asset is transferred into their SMSF , they can choose to treat it either as a contribution or an asset sale. If a member chooses to treat their in specie asset transfer as a contribution , they can also choose whether it will be a concessional (before tax) or non-concessional (after tax) contribution. She decides to transfer the business into her SMSF as an in-specie CGT cap contribution. Instead of selling her business to a third party or to her SMSF and contributing the cash proceeds to her SMSF , she decides to contribute her business to her SMSF as an in-specie CGT contribution of $400under the 15-Year Exemption.

Transferring assets into an SMSF as an in-specie contribution can provide considerable tax benefits to an SMSF , but the devil is in the detail. The ability to transfer assets into an SMSF is a unique advantage that SMSFs have over most public offer and retail funds. For example, instead of contributing money into your SMSF , you may decide to contribute a parcel of shares that you own instead. Basically, the SMSF is buying your shares off you, instead of you selling them down and then contributing the cash. Related party rule.

In making this type of contribution , you will have to be aware of the related party rule for SMSFs. In - Specie Contributions There are two ways for an asset to move into your SMSF. The relevant one here is business real property, which broadly means property used mainly for business purposes. Provided the asset is business real property and is acquired at market value, the SMSF can acquire (either as a purchase or in=specie contribution ) the business premises from the member.

In specie contributions In specie contributions are contributions to your fund in the form of an asset rather than money or cash. Often these contributions are shares owned by the members. However, be aware of the rules around what assets can be transfererd in.

This acknowledges that members may have seen their balances diminish this year as result of the correction share markets experienced in response to the pandemic. SMSF members are required to drawdown between two per cent and seven per cent of their super fund , depending on their age. The amount increases the older a member is. SMSF trustees develop their fund ’s investment strategy and make all investment decisions.

Public super fund members generally can ’t choose the specific assets that their funds are invested in, though they usually have some degree of control over the type and mix of their investments. Fund reserves allocated to members impact their contribution caps. Selling assets or an in- specie payment to another fund or yourself is a CGT event and must be accounted for in the final.