All You Need To Know About SMSFs

The Australian Tax Office (ATO) has made it easier for small business owners to establish Self Managed Superannuation Funds (SMSFs). This article will discuss the benefits of establishing an SMSF, the process of setting up one and how to manage your fund.

You must consult with your accountant before deciding which type of fund is best suited for you. The ATO has put together some resources on their website so if you are unsure what to do next, then head over there!

An SMSF is a self-managed superannuation fund. This type of fund allows you to choose your investment manager and offers greater flexibility than other types of funds, such as the public offer managed funds or private enterprise funds.

The rise of the self-managed super fund (SMSF) has been a boon to many Australians. SMSFs are tax-efficient, easy to manage and offer greater investment returns for those who have saved up enough money. However, despite their benefits, there are certain risks involved with setting up an SMSF that you should be aware of before making your decision.

The purpose of this article is to provide a general introduction to self-managed super funds (SMSFs) as well as an outline of the advantages associated with them. Those who aren't interested in reading through all of the specifics can skip to the end when there will be a summary.

A Self-Managed Superannuation Fund, often known as an SMSF, is a specific kind of superannuation fund that makes investments in shares and other types of investments on behalf of its members (sometimes called trustees).

Instead of being administered by a huge financial institution on the outside, the fund is managed internally by one or more of its members. In this post, we will examine how you can set up your self-managed super fund (SMSF) as well as its advantages over typical super funds, such as cheaper fees, better control and freedom with investment decision-making, tax benefits, and so on.

A self-managed superannuation fund, or SMSF, is the same thing. It is a sort of investment vehicle that enables you to make investments in a variety of assets without being bound by the stringent regulations that are associated with other types of funds.

The contributions made by your company and salary (which can be up to $25,000 per year) are not taxed at the point of contribution nor when they are withdrawn, making the tax benefits a significant part of the overall benefit package.

In the event that something unexpected happens to your family, the insurance premiums that you pay will cover the associated medical costs. Here is everything you need to know about establishing a self-managed super fund (SMSF), in the event that you are considering doing so!

Over the course of the past few years, SMSFs have gained a lot of traction. They are a form of self-managed superannuation that has been developed in Australia to assist people in saving money for their retirement. Over one million people in Australia are now making use of self-managed super funds (SMSFs), and 10% of all super funds are now managed by SMSFs.

Before you make a decision on whether or not to establish one for yourself or any other members of your family who want to retire in the near future, there are a few things you need to be aware of regarding them, namely the following:

Simply put, what is an SMSF? What kinds of tax benefits am I going to receive from it? What are the steps involved in establishing one?

This post on the blog will answer these questions and more, providing you with all the information you require before choosing whether or not it is worthwhile to look for this.

Let's get started!

SMSF Contributions

The main contribution requirements that apply to other types of superannuation funds also apply to SMSFs, with a few exceptions for specific circumstances.

1. In-specie contributions

When a member of an SMSF transfers ownership of an asset to their SMSF, this action constitutes an in-specie contribution. As a consequence of this, the total value of the fund's capital increases, which is seen as a contribution coming from the individual whose member balance has increased.

In-kind contributions can be made to any superannuation fund, provided that the fund complies with any product-specific restrictions. However, self-managed super funds (SMSFs) are more likely to be familiar with them than public offer funds.

In spite of the fact that an in-kind contribution is regarded as an acquisition from a related party, which is normally frowned upon, there are still sufficient exemptions for there to be room for in-kind contributions to be deemed a legitimate method of operation.

The vast majority of contributions in kind are provided through the use of listed shares or commercial real estate. The transfer is treated as a disposal for the member, and the member may be subject to capital gains tax on any gain that is realised (CGT). However, there is a possibility that the individual will be eligible for some concessions, in particular in the case when the individual uses the property in their own business or as an associate.

It is not necessary for the entire value to be transferred to an SMSF in order for it to be regarded a contribution. This is especially advantageous in situations in which the value of the asset is higher than the contribution caps that are open to the contributors.

Example

The transfer of a property with a value of $430,000 to an SMSF could result in an excess non-concessional contribution of $100,000 if the full value of the property is deemed a contribution.

We might prevent this result by treating the remaining portion of the transfer as a sale and treating the remaining portion of the transfer as a contribution utilising the greater maximum that is available under the bring-forward rule. In order to complete the sale of that section of the property, the SMSF would be required to move a total of $100,000 worth of cash or other assets.

In addition, assets can be taken out of the fund in the form of in-kind payments; but, and this is very essential, in-kind payments can only be made in the form of lump sums.

Cash is the only acceptable form of payment for pensions. Since the SMSF is selling the asset rather than buying it, the regulations that govern acquisitions from related parties do not apply to these transactions because the SMSF is not making a purchase.

2. Strategy for delayed deployment of resources

With the help of this strategy, a member of an SMSF can make a concessional contribution and claim a tax deduction in one year, but that contribution will only count towards the member's contribution cap in the following year. This effectively brings forwards the concessional contribution cap from the previous year.

According to rule 7.08 of the SIS, the trustee of a superannuation fund has until the end of the 28th day of the month in which a contribution is received to allocate that contribution to a member's account (unless it is not reasonably practical to do so).

An illustration of how this regulation can be used to delay an allocation is provided in the Australian Taxation Office's (ATO) Tax Determination 2013/22. This illustration shows how a member can make a contribution in one year and have it assigned to the cap of the following year.

The two scenarios that follow are potential candidates for this tactic's application.

3. Contributions that are personally deductible

It is possible to obtain the deduction in an earlier year than the year that the contribution cap is used since the contributor is eligible for a tax deduction in the year that the contribution is made.

Example

Peter is in the process of selling his company, and he does not anticipate having a sizable amount of taxable income the following year.

In addition to this, he does not have any unused concessional contribution cap from any of the prior financial years. As a consequence of this, he will be able to make at least one of his two personal deductible contributions totalling $27,500 in the month of June during the fiscal year in which the business will be sold.

By utilising the method, he would be able to postpone the assignment of the contribution for June until July. As a consequence of this, he is allowed to make larger contributions to his superannuation plan, despite the fact that he might not have had sufficient taxable income the next year to qualify for a personal deduction contribution.

In addition to this, he is eligible to make a deduction for $55,000, which can be applied against the increased taxable income that resulted from the sale of the company. In addition, because he is spreading the payment out over two years, he will not have any extra contributions.

Importantly, in this scenario, he would not be able to make a single payment of $55,000 but rather would need to make two separate contributions totalling $27,500 each. However, the ATO does not permit individual sections of a donation to be allotted separately.

4. Limits on contributions due to age and employment

According to regulation 7.04 of the SIS, the contributor is required to demonstrate compliance with the contribution restrictions at the time the contribution is made rather than at the time the contribution is distributed.

This distinction would be to the benefit of the following contributors, who are allowed to make a contribution in June and allocate it in July using the cap from a year in which they would have otherwise been unable to contribute:

• people who have been retired for a number of years and will turn 67 in June and continue to make contributions up until their milestone birthday

• those with ages ranging from 67 to 74 who pass the job test in the current year but won't in the following year (they may separately use the work test exemption)

• those who will reach 75 within the current fiscal year have a short window of time in which they can make a contribution. If the individual has met the requirements of a work test or been exempt from the work test prior to the contribution, then the contribution can be taken until the 28th day of the month following the individual turns 75.

Although the determination made by the ATO only applies to concessional payments, the method has the potential to also be effective for non-concessional contributions by enabling an individual to make non-concessional contributions in a year in which they normally wouldn't be able to do so. In addition to that, it might help with providing lumpy assets.

Example

Mary, who is 63 years old, possesses commercial real estate with a value of $440,000 that she can contribute to her SMSF. The following choices are open to her:

• You should transfer the remaining $330,000 of the property the following year after contributing $110,000 of it this year so that she and the SMSF can be tenants in common with each other.
• Transfer the entire property to the SMSF this year, and consider $330,000 to be a contribution and the remaining $110,000 to be a sale of the property.
• Transfer the entire property into the SMSF this year, treating $110,000 of it as a contribution and $330,000 of it as a sale; this is predicated on the assumption that the SMSF has sufficient other assets to pay her as consideration. After that, the year after that, the $330,000 that was received from the fund might have been contributed as a non-concessional amount.
• Another strategy would be to transfer the property to the SMSF all at once in June, with a non-concessional contribution of $330,000 and a sale of $110,000. This would be done in one transaction. After that, the total of $110,000 in proceeds might be contributed back to the SMSF in a separate transaction, and the SMSF could immediately allocate that transaction.

After that, the contribution of $330,000 may be assigned in July, which would result in the full value of the property being donated in a single year without the need for an additional contribution.

Because components of this amount cannot be allocated independently, the sum of $110,000 will be considered to be the proceeds of a sale. As a result, since we are recognising this sum as both a sale and a re-contribution, we have effectively produced two distinct contributions.

Acquisitions by SMSFs and Related Parties

1. What does the Draft Decision concern?

It has been established through the Draft Ruling that the restriction on self-managed superannuation funds (SMSFs) "acquiring" an asset from a related party also applies to the situation in which an SMSF passively receives an asset from a related party.

It is interesting to note that the ATO is taking a different approach to the issue of SMSFs borrowing money through 'instalment warrant arrangements' in light of the fact that it is now expanding the prohibition in the manner described above.

The Draft Ruling also affirms the opinion that has been maintained by practitioners for a very long time, which is that it is permissible for related party assets to be "contributed" to SMSFs, in addition to SMSFs being able to buy these assets.

2. A brief description of the restriction and exceptions

The Superannuation Industry (Supervision) Act 1993, sometimes known as "the Act," makes it illegal for superannuation funds to purchase assets from persons that are related to them in any way. Only SMSFs will be discussed within the scope of this essay.

It is against the law for the trustee of an SMSF to knowingly purchase an asset from a connected third party, according to section 66(1) of the Act. The policy that underpins the prohibition is the requirement to stop members of SMSFs from taking funds out of the fund (before they retire) by effectively purchasing an asset from themselves or a related party. This is the reason for the restriction.

The following situations qualify as appropriate exemptions from the restriction on the part of the SMSF trustee:

• may acquire listed securities at the price determined by the market;
• may purchase commercial real estate at its current market price;
• may acquire, at market value, an asset that is considered to be an in-house asset, provided that the 5% limit on in-house assets is not exceeded; and
• may be willing to accept a monetary donation.

The provisions 66(2) and 66(2A) of the Act are where the exemptions to the prohibition can be found.

3. What new or resolved concerns does the Draft Ruling address?

The Draft Ruling brings up three points to think about:

• It broadens the scope of the prohibition to include making contributions of assets to an SMSF, regardless of whether the contributor is a member of the SMSF or a party associated to the SMSF.
• It demonstrates that there are exemptions to the rule that apply to the donation of assets as well as other things.
• It appears that the ATO will resolve these challenges by adopting a pragmatic regulatory approach; however, this does not dispel the possibility that there may be difficulties associated with instalment warrant arrangements.

The following discussion will examine each problem.

4. Issue 1 'Acquire', 'Contribute', 'Asset' And When Money Isn't 'Money'

The meaning of 'acquire'

The Draft Ruling reaffirms that the term acquire can have a broad range of meanings, one of which is the acceptance of a donation. However, the facet of this interpretation that I find most intriguing is the fact that even though "acquire" is frequently thought of as indicating some action on the part of the trustee, the Draft Ruling expands the meaning to include more passive behaviours such as a receipt. This is the most intriguing aspect of this interpretation.

Goldberg J. granted the phrase a wide and ordinary meaning in Lock v. FCT [2003] FCA 309, an approach that the ATO has supported:

...the word "acquire" can mean "get," "gain," or "receive," and the word "acquisition" has a meaning that corresponds to those three verbs.

"acquire" means "get" or "earn" or "receive"... The word "acquire" comes from everyday language and does not have a specific meaning in the world of technology.

This position is consistent with both the Supplementary Explanatory Memorandum of the Act as well as the opinions that were articulated before the Select Senate Committee on Superannuation.

The meaning of 'asset'

The Act considers any form of property, including monetary assets, to be an asset (whether Australian or foreign currency).

According to the Draft Ruling, any form of the property can be understood to refer to the property that possesses economic value. The term is made more clear by the Draft Ruling, which states that it:

• encompasses any right, interest, or value that is legally capable of being owned and that can be sold or transferred to a self-managed superannuation fund (SMSF). The property could be personal or proprietary, legal, equitable, or statutory; it could also be tangible or intangible; and it could be any of these things as well.

As a result, an estate, an interest in land, a car, machinery, shares, a mining lease, intellectual property rights, and other forms of ownership can all be considered assets. Therefore, if a trustee or investment manager accepts a contribution of property in any manner, they will be in violation of section 66(1).

When coins aren't considered "money," what does that mean?

Although the SISA defines "money" as an asset in general, the restriction does not apply to acquisitions that are made in the form of monetary contributions.

On the other hand, the Draft Ruling makes a distinction between:

• cash, checks, and money orders are all examples of forms of money that can be used as a medium of exchange.
• there are some mediums of exchange, such a rare coin collection, that, if 'bought by' or 'contributed to' an SMSF, will not be considered a donation of'money,' but rather, the acquisition of an asset.

5. Issue 2 Contributions As Acquisitions At 'Market Value'

Because "acquiring" includes "receiving by contribution," the exceptions on the assets that an SMSF trustee might "acquire" (for consideration) also apply to "contributions," because "acquiring" includes "receiving by contribution" (for no consideration).

It is encouraging to see the Australian Taxation Office (ATO) accept this approach, despite the fact that practitioners have traditionally interpreted the related party purchase regulations.

The ATO has also said that if contributions are made in this manner, then the contribution amount would be treated as equal to the market value of the property that was contributed. This was stated in the previous clause.

The term "market value" is defined by the Act as the amount that a willing buyer may reasonably be anticipated to pay to purchase an asset from a willing seller under the following conditions:

• the parties conducted their business without directly interacting with one another;
• the sale of the asset took place after it had been advertised effectively; and
• both the buyer and the seller shown wisdom and expertise during the transaction of the sale.

The Australian Taxation Office (ATO) has confirmed that an SMSF trustee is permitted to acquire an asset from a related party in part by the following:

• by contributing a portion of the current market value and
• considering the market value balance to be a financial contribution from the member (the contribution limit for the member must be adhered to).

6. Issue 3 The Issue For Instalment Warrant Arrangements

The Draft Ruling seems to indicate a potential issue for instalment warrant arrangements, at least at first inspection. Thankfully, the ATO offers a solution that gives the impression that everything will turn out fine.

According to the ATO, a "acquisition" encompasses the passive receipt of any interest in the property, regardless of its nature. The problem is that such a passive receipt would take place as part of the arrangements that would allow an SMSF trustee to borrow money in order to acquire an asset by means of an instalment warrant arrangement. This is a problem because it would be difficult to avoid.

Here are the steps: When a Self-Managed Superannuation Fund (SMSF) enters into an instalment warrant arrangement, the asset that the SMSF is purchasing is entrusted to the custody of a third party until the SMSF has repaid the loan to the lender in full.

When the loan is paid off, the trustee of the SMSF obtains legal title to the asset, which had previously been held by the custodian. Acquiring property from a related party in this manner constitutes taking legal title to the land (namely, from the custodian of a trust which the SMSF effectively controls).

To our great relief, it appears that the ATO has taken a realistic approach to the problem at hand. For instance, the following is stated in the ATO's book "Instalment Warrants and Super Funds — Questions and Answers," which was just recently made available:

A self-managed superannuation fund (SMSF) will consider a security trust that controls the asset underlying an instalment warrant agreement to be a connected party (and possibly also of other super funds).

When the debt is paid back, the legal interest in the asset may be considered to have been purchased from the security trust. This is because of the circumstances described above. On the other hand, the Australian Taxation Office believes that the new legislation intend for this to not be in violation of the previously established prohibition on obtaining assets from related parties.

It should come as no surprise that the stance taken by the ATO in the Draft Ruling is in direct opposition to this paragraph. However, this demonstrates that the ATO will take into consideration the underlying policy imperatives and will adopt a regulatory approach that is sensible and pragmatic.

Guidelines For Transferring A SMSF To An Industry Fund

This column has addressed, on multiple occasions, various aspects of the process of winding up a self-managed super fund in order to transfer the proceeds to a public fund, such as an industry fund. These aspects include: In this particular scenario, you are looking for someone to assist you in "fully and efficiently" transferring your superannuation benefits.

You mentioned that you already have a trustworthy SMSF administrator who is able to assist you in winding up your fund and transferring it.

According to North Sydney financial planner Kevin Smith of The Professional Super Advisers, an independent adviser who gives comprehensive financial advice on all types of superannuation, including establishing keen interests, from self-managed to industry funds, but also switching between them, that is a good start. Kevin Smith is a member of The Professional Super Advisers.

According to Smith, for the past ten years he has been included on a registry of advisers authorised by the main industrial fund Australian Super to advise on the fund's various super programmes.

In addition to recommending other industry funds, he highly recommends Australian Super to anyone interested in moving to an industry fund due to its excellent performance. He also advises other industry funds.

Smith recommends that you continue to work with your SMSF administrator if you are satisfied with their services. They will be in possession of all the SMSF records, and there is no use in involving anybody else if you do not have a problem with the SMSF provider who is already in place, particularly if you wish to wind up a fund and finish a transfer exercise by the 30th of June this year.

He advises that you make sure everything goes according to plan because the process of winding down and liquidating the SMSF is an essential component of the transfer. Because an industrial fund can only take cash contributions, it is required for an SMSF to liquidate all of its assets. This is why it is vital.

Another component of transferring to an SMSF is the effective commutation (or conversion) of any pension from retirement income to accumulation. This can be done with any pension. Before you submit this information to the industry fund, you must first disclose this to the Australian Taxation Office after this has been completed.

This must be recorded as an event in your transfer balance account so that it can count against your transfer balance cap. The transfer balance cap is the maximum amount of money that you are permitted to have in retirement phase income streams. Debit events are what happen when you transfer money out of the retirement phase, and by the time you start collecting your pension, this maximum will have been set at $1.6 million.

An existing administrator is likely to be in the best position to efficiently prepare the necessary rollover benefits statement that must be provided to the industry fund with the necessary information such as member details and tax components. This statement must be provided to the industry fund with the information.

Smith claims that, should a transfer take place, one of his responsibilities would be to assist in the creation of an industry fund account and to support a seamless transition from one fund to another. According to him, completing all of the necessary papers in a timely manner is the most critical aspect of any transfer.

According to him, a correct and effective transfer is one in which you start by ensuring that you have selected the appropriate industry fund and made the investment decisions that will be the most suited for your needs. He sees this as the first step in a transfer.

After that, you will need to sell your assets and communicate with the administrator of your self-managed super fund regarding the rollover reporting and closing out procedures that you require. When selling investments from investments like as term deposits that require a certain amount of time to mature, an SMSF may run into problems.

Possibilities with a pre-mix

One potential source of trouble is double-counting of the transfer balance on an account. For instance, a transfer balance transaction such as commencing a pension had been reported by an industry fund before the SMSF disclosed its wind-up status.

When Smith is approached for advice on transferring an SMSF to an industrial fund, he tells the client that they must be aware of what they are getting into before making the transfer. In addition to this, they need to have an understanding of the investment opportunities that are presented by industry funds and how these opportunities compare to what they have been accustomed to.

For example, an industrial fund does not have the same level of control and flexibility over investment decisions and pension payment options as an SMSF has.

They are able to provide pre-mixed options with general descriptions such as high growth, growth, balanced, and conservative, in addition to more specific options such as Australian and international shares, Australian and global property, fixed interest, and cash. This is in relation to the investment choices that they have available to them.

Smith claims that you are investing in pooled funds through an industry fund, which means that the tax structure, dividend franking credit structure, and investment return structure might all be significantly different. For example, when you choose pre-mixed investment alternatives, you receive an average of the franking credits; it is important that you understand what this means.

It is also essential to have an understanding of the fact that certain assets held by industrial funds are not listed on any financial markets. As a consequence, these assets can be valued quite differently. It's possible that some are appraised every three months, and the outcomes are frequently unexpected.

According to Smith, it is imperative that you are aware of the performance variances that exist between various investment options and funds.

Even while the difference in performance between various choices and funds could only be a couple of percent every year, this might make a significant impact over the course of several years.

It is essential to have a solid understanding of the inner workings of industry fund costs, particularly investment management fees.

Given that they are levied as a percentage of assets, these might become rather expensive for member accounts with a high total value. If you have $2.3 million in your account, for instance, the annual price of 0.6% of that amount is around $14,000. However, in exchange for this fee, your investments will be managed by a professional.

The manner in which pensions are funded by industries also differs. These are more official arrangements, as opposed to the ad hoc withdrawals that can be made from an SMSF, and they involve receiving regular payments. The same holds true for withdrawals of arbitrary sums all at once, which are also more formal.

Because checking off the wrong box on a list of instructions can generate a different result, it is necessary to provide instructions that are crystal clear in regard to the processing of income withdrawals.

Case Studies

1. Case Study 1 - Company Real Estate

The real estate that Trevor S and his wife possess is held in a family trust, in both of their names, and in both of their names together. Trevor wants to hear your opinion. Both he and Mrs. S are considering adding one or more properties to their self-managed super fund (SMSF). You have informed him that a preliminary question serving as a threshold that needs to be answered for each property is whether or not the property in question represents business real property.

Mrs. S is the owner of Property 1, which also happens to be the location of Trevor's accounting office and is rented out to him. There is no other application for it.

Does it make a difference whether Property 1 is leased to an accounting practise or not? Trevor is one of the five partners at this practise. What if Trevor is not a partner in the accounting firm that you work for?

Consider the possibility that Mrs. S, together with the spouses of the other partners in the practise, owns Property 1 jointly.

The S Family Trust is the legal proprietor of Property 2. A renter who is not related to the owner has a lease on the property. Within the premises of the property, the tenant maintains a courier service. The right to use the shed that is located in the backyard of the property has been reserved for Trevor, and he uses it to store his classic automobile.

Mrs. S owns a total of 4 residential properties, one of which is referred to here as Property 3. She lets all of them out to renters who are not related to her who live in them.

Property 4 is the address of the house that Trevor and his family call their permanent abode. Mrs. S uses the front room of the house as the location of her massage business. This room is solely devoted to Mrs. S's massage business and is not used for any other purpose, including personal activities.

The daughter of Trevor now owns Property 5, which she purchased with the intention of redeveloping and then selling.

The family trust is the owner of property number 6. It is a standalone apartment that is part of a larger apartment complex. Each of the apartments serves as a place to stay for a shorter period of time.

The block of flats is managed by a team of independent and qualified professionals. The block's income and expenses are combined into a single pot, and the owner's share of the nett income is determined not by the number of people living in their unit but by the total number of apartments they own. There is not a single owner living in any of the units.

Trevor is the owner of Property number 7. The land is zoned for residential use, and it is managed by a property manager. The percentage of occupied rooms determines the owner's share of the nett income.

Trevor maintains his hobby farm on property number 8.

After retiring from his accounting practise, Trevor purchases the ninth piece of real estate. Property 9 is likewise used for farming, but in addition to that, it features a home where Trevor and Mrs. S spend their retirement years.

2. Case Study 2 - Section 66, In-House Assets

John H and his wife, Mrs. H, have been winning gamblers for a number of years. In order to reduce their overall tax burden as much as possible, they have made sizeable contributions to their SMSF. Additionally, both of their children are contributors to the SMSF that their parents have established. As a direct consequence of this, the SMSF now has more than $4 million.

John is the proud owner of a vacation property in Victor Harbor. He makes it available to his family to use for a total of eight weeks during the summer months, despite the fact that he leases it out on a business basis for the most of the year.

The value of the home is up to 150,000 dollars.

Is it possible for the SMSF to purchase the property? In order for it to accomplish this, what criteria must it fulfil?

Assume that John will not proceed with the transfer, and that the SMSF does not contain any other in-house assets than the one being transferred. However, his daughter is preparing to purchase a house, and she asks John to lend her some money so that she may complete the purchase. Is he able to make the necessary arrangements for the SMSF to provide it to her?

3. Case Study 3 - Benefits And Drawbacks: Things To Think About

Peter S. is a dissatisfied golf professional who is not very good at the game. On the road, he has not been able to carve out a successful life for himself.

Because of Peter's string of failures to make the cut over the course of the past year, he was forced to make a significant shift in his life's trajectory, and he is now running a business out of a shop that he owns where he sells golf equipment. It is estimated that the property is worth $100,000.

Peter was fortunate enough to receive a sizeable sum of money as an inheritance from a long-lost aunt a few years ago. Over the years, he has placed every penny into his self-managed super fund (SMSF).

Peter could really need some of the money in the SMSF that he won't be able to touch until he retires, but he can't get his hands on any of it until then. Therefore, he seeks some direction and guidance from you.

4. Case Study 4 - In Specie Contributions

Andrew S. is the sole proprietor of his own legal practise. He is the sole owner of the property, which has a current market worth of $150,000 and serves as the location of the medical business.

Unfortunately, Andrew continues to struggle with his cash flow, which is not helped by the fact that his tax obligations are so high. As a consequence of this, he has not yet been in a position to contribute to his retirement account in the manner that he would have like. He wants to know what choices are available to him.

Would you provide the same recommendation if Andrew's family held the property through a trust instead?

Case Study 5 - 'Gearing'

Malcolm W is interested in making a financially sound investment by purchasing a piece of commercial real estate from a non-related third party. He has his sights set on a piece of real estate that is worth $300,000. Unfortunately, his SMSF only has $150,000 available in cash, which prevents him from using it to purchase the home. So, what choices does Malcolm have before him?