Masterclass SMSF – What does an “In Specie” Transfer or Contribution mean?

MASTERCLASS SMSF – What does an “In Specie” Transfer or Contribution mean?

SMSF – What does an “In Specie” Transfer or Contribution mean?

An “In Specie” transfer or contribution is a way of moving an asset into a Self-Managed Super Fund by ownership without having to actually sell the asset for cash. In Specie” is a Latin term meaning “in the actual form”. Transferring an asset in specie means to transfer the ownership of that asset from one person/company/entity to another person/company/entity in its current form/as is, meaning without the need to convert the asset to cash.

Members of a SMSF usually make contributions in cash or employers pay in cash the SG (Super Guarantee) concessional super obligations. 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.

Assets Allowed for In Specie Transfer

The only assets currently allowed to be transferred to a SMSF from a Member (or an associate of an SMSF Member by blood relation or marriage or entity controlled by a Member) are as follows:

  • ASX Listed Securities;
  • Widely Held Managed Funds;
  • Business or Commercial Property;
  • Cash Based investments such as Bonds and Debentures.

Residential Property Note – whilst a SMSF can purchase Residential Property from a person who is not a Member (or an associate/relative of a Member) a SMSF cannot purchase Residential Property from a Member (or an associate/relative of a Member) even if the purchase is at market value, otherwise it is a legal contravention.

How to Transfer Allowable Assets

To transfer ASX Listed Securities from your personal name to the name of the SMSF, an Off Market Transfer Form must be completed and lodged where you list the purchaser of the Shares as your SMSF.  You will not need to specifically state which Member the shares are being allocated to until the year end accounts are prepared.

To transfer Widely Held Managed Funds (such as large commercial managers like AMP, Platinum, Colonial  etc.) from your personal name to the name of the SMSF, an Off Market Transfer Form is completed and lodged with the Fund Manager directly. 

To transfer Commercial Property from your personal name to the name of the SMSF, you will need to execute a Contract of Sale and will need a solicitor to prepare the required documentation including lodging the transfer documents with the relevant State Revenue Office.  You will need to list the Purchaser of the Commercial Property as your SMSF.

Market Value of In Specie Assets

It is important to note that all In Specie Transfers of assets from a Member (or an associate/relative) must be transferred at Market Value.  The Market Value must be clearly detailed in the forms for ASX Listed Securities or Managed Funds or in the event of Commercial Property in the Transfer Documentation. 

How the In Specie transfer is treated in the accounts

When an In Specie Transfer occurs in an SMSF, it can be treated in one of two ways – either as a Contribution or alternatively as an Asset Purchase by the SMSF.

Accounting for an In Specie Transfer as a Contribution (to a member)

If you want the transfer to be treated as a contribution you will need to elect which Member will be allocated the contribution and the type of the contribution to be allocated, namely Non Concessional (no tax deduction claimed) or Concessional (tax deduction claimed, eg employer). Once the election is made, the value of the asset (not the asset itself) will be allocated to the Member when preparing the annual compliance documents for the SMSF.  Remember the Contribution Limits will need to be watched under this option.

Treating In Specie Transfer as an Asset Purchase (to pooled funds)

In this case the value of the asset (not the asset itself) will be allocated on a proportional basis to each Member based on that Member’s existing ownership of the SMSF at the time of the transfer, when preparing the annual compliance documents for the SMSF.

Note – The information provided is based on our current understanding of the relevant legislation and regulations and may be subject to alteration as a result of changes in legislation or practice. Ask us to refer the appropriate professional you can obtain advice from, no obligation.

Want to know the options and how property works in SMSF? See our FREE slides SMSF & Property Overview

Call for FREE education, or to speak to an advisor about your specific situation. SuperBenefit works with SMSF trustees to CONNECT them with the advisors they need. A call is FREE.

If you have any questions, why not give us a call – it’s FREE! No obligation.

0407 361 596, Paul

About SuperBenefitnews

Self-Managed Superannuation Service Providers in Australia. SuperBenefit provides a wholistic SMSF assistance, education and administration service continuum - 1. “assistance” is help of whatsoever nature where our overall SMSF experience and knowledge enables us to provide assistance/help without any legal (or “license”) limitations. 2. “education” involves providing knowledge through teaching, coaching and mentoring about all matters SMSF, including (but not limited to) investment issues such as equities and property, 3. “administration” encompasses all admin aspects of legally required SMSF trustee and member record keeping including (but not limited to) audit and ATO matters. In keeping with our key point that SuperBenefit does not provide Financial Advice, where issues arise from 1, 2, and/or 3 above Indicate a need for a legally authorized provider (such as a Financial Adviser) and the client does not have their own service provider, the client can utilize SuperBenefit’s ‘Connect Assist’ … SuperBenefit, in itself, does not provide Financial Advice, but it does provide the wherewithal for great SMSF service. WE do not provide Financial Advice or any other service that requires a legally authorized provider. However, where such advice or service is required we have our ‘Connect Assist’, a SuperBenefit resource we use to connect clients to a Licensed Advisor or other legally authorised service provider. Call us 0407 361 596, no obligation FREE Connection call to see how we can help you!
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