Home' API Magazine : November 2014 Contents NOVEMBER 2014 n APIMAGAZINE.COM.AU n 45
acceptable by the ATO. When looking at
apartments, the state where the property is
and the type of title are important. In some
cases, you can’t depreciate the value within
common areas, so check carefully. Other
areas for special attention include furniture
packs and low-cost and low-value pool items.
If the property is commercial there may be
an opportunity to claim under the simplified
depreciation rules for small business entities.”
n2. YOU PAY YOURSELF TWICE
If you have to negatively gear a property
within a SMSF, you can pay yourself twice.
Sound too good to be true? It isn’t!
You can salary sacrifice and get a tax benefit
while working, while also using the money
to cover holding costs for the property in
Brian-Wheatley says most people don’t
understand how the ATO actually gives
you money back if you put money into
your super fund first. The amount you can
contribute to your super fund will depend on
“If you pay yourself first through making
contributions, you’d be taxed on that money
anyway,” she says.
“You can’t afford not to (pay yourself first
through salary sacrificing into your super
account) because you don’t have that money
anyway. By contributing to the maximum
amount you’re able to in a super fund, you’re
able to leverage your super fund and also
For example, Harris explains you can salary
sacrifice up to $35,000, depending on your
age, and you’ll be charged at a lower tax
rate. In other words, if you earn $100,000 a
year and put $35,000 in your SMSF, you’ll
be charged at a tax rate as if you were
Using that $35,000 in your super fund,
you can then pay down debt owed on your
“You’re getting a tax deduction to put
money in and you’re actually using that
money to pay down debt,” Sandkuhler adds.
n3. SMALL BUSINESS BONUS
While you might not be allowed to live in
your own residential property, you can rent
out a commercial property you own to your
own business. So for those who own a small
business, it’s a nice bonus.
“Your SMSF could potentially purchase
your business premises, allowing you to pay
rent directly to your SMSF at the market
rate,” ASIC says.
Brian-Wheatley adds it’s important to
have good leases in place, if you do decide
to purchase a commercial property through
11Set up the correct
The structure of a SMSF can be complex
and so getting it right early is imperative.
“The other thing a lot of people ignore is if
their super fund has shares and they want
to buy a property and use super as a deposit,
they need cash,” Raiss says.
“They need to convert their shares into
cash. That’s a capital gains tax event. We
tell people to get a cash balance instead and
that’s also why we advise people to get pre-
approval and do rollovers.”
Raiss warns that the name on the contract
of the property has to be in the correct
structure before you buy.
“You can’t go and buy a property and then
say ‘I’ll now put it in my SMSF’,” Raiss says.
“One of the biggest mistakes we find is
people go to auction, they buy a property,
then they want to put it in their super. You
can’t sell a residential property that you
own into your super fund. It could cost you
a second stamp duty. But even without
that, the law prohibits buying a residential
property from a member or associate of
the member. You can buy listed shares and
commercial property, but not residential.”
Raiss believes it’s imperative to have life
insurance when it comes to purchasing
property in a SMSF.
“If one person leaves (the super fund) they
might have to sell. So imagine if one person
dies. Just having life insurance outside your
super isn’t enough. You need it in the super
fund correctly established, so the member’s
death benefits payment can be used as part
of (paying off) the debt.”
Always see an accountant first.
Source: Australian Tax Office and Chan and Naylor.
“One of the
we find is people
go to auction, they
buy a property,
then they want
to put it in their
Super Wealth n COVER STORY
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