A thought provoker for our Aussie readers… Renting your business premises but missing out by not purchasing the asset and placing it in your SMSF?
Many professional business owners are unaware of the significant tax and financial advantages associated with operating their business from premises owned by their self-managed super fund (SMSF).
Those that do buy a building they may otherwise be renting have the potential to place themselves in a stronger financial position for the future. There are a number of tax benefits by placing business premises into an SMSF. For example, property expenses, including interest expense and depreciation allowance are tax deductible, which means tax on income or SMSF contributions may be reduced.
Additionally, property held longer than 12 months may only incur capital gains of 10% or become tax-exempt if the SMSF is in pension phase. With a tax rate of only 15% there is also the possibility for significant tax savings on the rent you pay your SMSF, not to mention tax-free income if your commence a pension in your SMSF.
Under the SMSF recourse borrowing arrangements, up to 70% can be borrowed for business premises within your SMSF. You can also potentially transfer business premises owned outside of super into your SMSF and save thousands on stamp duty and capital gains tax, and free up debt in your personal name.
Placing business premises into an SMSF makes smart business sense, however you need to seek specialist advice and ensure it’s the best strategy for your professional business and personal needs.
Call Collins Hume today on +61 2 6686 3000 to ensure you minimise your tax and maximise your retirement savings.