Joanne is 35 and recently started her own boutique, renting a shop in her local suburb. It’s a great corner location providing excellent exposure to passing trade. Her landlord has decided to sell the shop she operates from for $350,000 and Joanne is concerned that moving will adversely impact her young business, but doesn’t think she can afford to buy the property.
She has few other assets, although she and her husband, also 35, receive very good incomes. Like most people their age, they have a large mortgage and little equity in their home. They have $90,000 in a retail master trust super fund and $40,000 in savings.
Discussing the dilemma with their accountant, he suggests acquiring the property using Calliva SuperAccess.
How Calliva SuperAccess can help Joanne
The couple will roll their super into a self-managed super fund (SMSF) and make use of their savings to make deductible super contributions ($18,680 each). Their SMSF invests in the property using Calliva SuperAccess by subscribing $126,000, which covers the deposit and transaction costs including stamp duty.
Calliva pays the vendor $350,000 and the business continues to pay the same tax-deductible market rent as it did before. The rent is now helping fund the retirement.
All future gains in the value of the property are concessionally taxed and Joanne no longer has to worry about being unable to renew her lease.
SMSF Contribution Q&As
Q.How do I make cash contributions into my SMSF?
A. Cash contributions are made to your SMSF by simply depositing cash into your SMSF bank account.
Q. Can I make contributions to my SMSF other than by way of cash?
A. Yes. You can make contributions other than by way of cash by transferring either listed shares, commercial property or managed funds into your SMSF. The amount of the contribution is the market value of the particular asset transferred.
Q. How are the contributions allocated?
A. All contributions made to your SMSF, whether in cash or via a transfer of assets, must be allocated to a fund member. This is a legal requirement. It is also a legal requirement that each member be issued with a Member Statement annually detailing their member balance movements including contributions made.
Q. What’s the difference between an Undeducted Contribution and a Tax Deductible Contribution?
A. Personal Contributions made into Superannuation on which no tax deduction is claimed are known as Undeducted Contributions. Contributions made into Superannuation on which a tax deduction is claimed are known as Tax Deductible Contributions. The contributions made by your employer are Tax Deductible Contributions because your employer has claimed a tax deduction on the contribution claimed.
Q. What Tax is payable on Undeducted Contributions and Tax Deductible Contributions?
A. Undeducted Contributions are not subject to tax. Tax Deductible Contributions are subject to 15 percent tax.
Q. When is the tax payable on Tax Deductible Contributions?
A. Tax is payable on Tax Deductible Contributions when you lodge the Income Tax Return for your SMSF. The Tax Return is lodged annually and is due for lodgement by May the year following the end of the financial year (or February where this is your Fund's first tax return for lodgement). Tax is not payable at the time the contribution is made.
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