One common tip around the end of year tax time is to transfer assets from outside super into a Self-Managed Super Fund (SMSF). Those who want to grow their super funds have the option of moving Business Real Property (BRP) into a SMSF, while only attracting a small stamp duty and little or no capital gains tax.
This might be useful if cash needs to be freed up to use as consideration of a transfer. It also avoids paying a high rent on business premises by buying the premises in a SMSF, and allows members to benefit personally from the high rental yield.
Be sure to first consider what a BRP is, given the recent ATO rulings:
- The property must be individually owned, not by a company or trust.
- The business use test must be satisfied, the BRP must be used ‘wholly and exclusively’ in one or more businesses.
- Special rules apply to farmland, where up to 2 hectares can be used for a residence without prejudicing the definition of BRP.
- There must be some element of physical use of the property, actions that are connected with its underlying business purpose.
It is vital to get advice to maximise tax savings before the end of June.