Placing investments from outside your SMSF into your SMSF can produce significant results due to the tax benefits of super.
For example if you have investments in your personal name valued at $300,000. If you are on the top marginal tax rate of up to 49% that will be calculated on the income and capital gains generated by the investments. Assuming income of 3% per annum give $9000 income – this could raise $4,500 in tax per annum payable on the income. Worse still, assuming the investment doubles every 10 years (a generally accepted investment principle) the capital gains tax bill on sale would be approximately $70,000 ($300,000 gain by 49% with 50% Capital Gain deduction, rounded).
Even if you plan on selling the investment, eventually the investment will be sold even if your beneficiaries after you die, sell it, as the tax bill will still be there. By transferring the investment into your SMSF (noting certain restrictions), the tax on the annual investment income will fall to $1,350 per year (super tax is 15%, a tax saving of $3,150 each year) and to $0 after you commence a Pension (a tax saving of $4,500 each year). In addition there will be no tax on the capital gain in your SMSF if the shares are sold after you commence a Pension. This can equate to a tax savings exceeding $100,000 depending on the period viewed!
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