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. What is SMSF in SMSF? However, there are several restrictions and regulations regarding what can be transferre as well as the tax ramifications of the contribution (s). The only assets currently allowed to be transferred to an SMSF from a Member (or an associate of an SMSF Member by blood or marriage or entity controlled by a Member) are as follows. ASX Listed Securities.
Widely Held Managed Funds. Business or Commercial Property. For example a parent making an in specie contribution to an SMSF on behalf of their children ( Fund members ) via the transfer of business real property.
If so, how would this contribution be treated by the Fund. 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. SMSF members can make an in specie asset transfer to their fund by: Completing and lodging an Off-Market Transfer form for the transfer of ASX-listed securities.
This form is available from any financial institution involved in securities trading. The SMSF should be listed on this form as the purchaser of the shares being transferred. In specie’ contributions ‘In specie’ contributions, refers to transferring assets such as shares or a commercial property direct to the SMSF rather than contributing cash. There are very strict rules on what can and can’t be transferred when it comes to in-house assets – for example, residential property you own cannot be transferred.
However, where an asset is disposed of by way of an in-specie lump sum benefit payment to a member under years of age, all or a portion of the value of the benefit payment may be taxable as a lump sum superannuation benefit in the hands of the member. In specie is the process of transferring shares, business real property or managed funds without selling the underlying investment. An in – specie contribution occurs when a member transfers ownership of an asset they own to the SMSF. The SMSF would have to transfer $100of cash or other assets to effect the sale on that portion of the property. Pension payments must be made in cash.
Or the member may want that particular asset. In Specie ” is a Latin term meaning “ in the actual form ”. 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. But what about if the member is getting an income stream. 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. Importantly only certain assets listed in the Super Laws can be transferred in specie from a Member who owns the asset, otherwise the transfer is a legal breach. The trustee can either buy the asset. The ability to transfer assets into an SMSF is a unique advantage that SMSFs have over most public offer and retail funds.
Note however that an in- specie contribution changes the legal ownership of the asset from the individual contributing to the SMSF. Therefore, you may have stamp duty payable by the Fund depending on the asset and capital gains tax may be payable by the contributor (as this is a disposal of the asset for CGT purposes). One option often considered is making an in specie transfer to your SMSF. Below we outline three possible alternative strategies that achieve the goal of moving the asset into the SMSF , without the in- specie contribution issue outlined above applying. It is an acquisition from a related party.
So this would put an end to any in – specie contributions. But scontains three exceptions. Listed securities, business real property and in -house assets below. So those three asset groups can still come into the SMSF via an in – specie contribution. Current Limited Recourse Borrowing Arrangements (“LRBAs”) allow for an SMSF to borrow money to purchase certain assets such as property.
Since the “single acquirable asset” rules have been relaxed thereby providing a more practical application of the ‘spirit of the law’. I am 7 recently widowed and planning to relocate to another city. My assets are my home, valued at about $500and a self-managed super fund with a NSW property valued at $280in it.