Home – New Forums Money matters Changes to superannuation in specie contribution rules

  • This topic is empty.
Viewing 5 posts - 1 through 5 (of 5 total)
  • Author
    Posts
  • #977964
    Paul Wineberg
    Member
    • Total posts: 43
    Up
    0
    ::

    As of the 1st July 2012, it appears as though a superannuation fund will no longer be able to accept listed shares as in specie contributions using an off-market transfer.

    At this point any shares held personally which you wish to transfer into your SMSF, will need to be sold on the open market by the individual, and purchased on the market by the SMSF.

    This means if you are looking at transferring shares into your fund from your personal name, you had better act quickly and do so before the 30th June.

    I am not sure why the ATO are doing this, the only thing it seems to be achieving is making the broker rich!

    Thanks.

    #1103763
    TehCamel
    Member
    • Total posts: 873
    Up
    0
    ::

    yes.. it would make the brokers a little richer, but..

    if I own, say, 1000 shares in BHP that I bought at $20.00 each
    and I sell them on the open market at current rate of 35, then i’d crystalise a gain of 15,000.

    Where as.. if i understand correctly, I can do an off-market transfer, at any rate I like.. so I could do an offmarket transfer to my SMSF, at say 27.50 per share, meaning I’d make a gain of 7,500 instead of 15,000..
    but the SMSF would make an instant gain of 7,500..

    I’m possibly on quite the wrong track here though?

    #1103808
    TehCamel
    Member
    • Total posts: 873
    Up
    0
    ::

    yes.. it would make the brokers a little richer, but..

    if I own, say, 1000 shares in BHP that I bought at $20.00 each
    and I sell them on the open market at current rate of 35, then i’d crystalise a gain of 15,000.

    Where as.. if i understand correctly, I can do an off-market transfer, at any rate I like.. so I could do an offmarket transfer to my SMSF, at say 27.50 per share, meaning I’d make a gain of 7,500 instead of 15,000..
    but the SMSF would make an instant gain of 7,500..

    I’m possibly on quite the wrong track here though?

    #1103765
    Paul Wineberg
    Member
    • Total posts: 43
    Up
    0
    ::

    The shares need to be transferred at market value when done as part of an off market transfer, and therefore there would be the same CGT consequences. The difference being, you can pick the lowest market value, which may only be slight. So you can not just choose a nominal figure. The ATO can and on occasions do check the market value. You need evidence of market values which can be easily obtained from ASX.

    One of the major advantage of this is for small business owners who do not have cash to make super contributions for themselves. Lets say you have $50K worth of BHP with a cost base of $30,000 (lets assume you have made no other contributions and your contribution cap is $50K PA). You could sell this for no consideration, and you would have a capital gain in your personal name. of $20K. You then take the CGT discount and have a capital gain of $10K. But, because you have not received any money for these shares personally, you could potentially claim a deduction personally of $50K to offset your business income.

    This works in som eother situations, but this is one of the more common benefits. This will work the same in the future, but from the point of view of the transaction, this will need to be done through a broker, so it just adds another $20-$60 to the transaction.

    #1103809
    Paul Wineberg
    Member
    • Total posts: 43
    Up
    0
    ::

    The shares need to be transferred at market value when done as part of an off market transfer, and therefore there would be the same CGT consequences. The difference being, you can pick the lowest market value, which may only be slight. So you can not just choose a nominal figure. The ATO can and on occasions do check the market value. You need evidence of market values which can be easily obtained from ASX.

    One of the major advantage of this is for small business owners who do not have cash to make super contributions for themselves. Lets say you have $50K worth of BHP with a cost base of $30,000 (lets assume you have made no other contributions and your contribution cap is $50K PA). You could sell this for no consideration, and you would have a capital gain in your personal name. of $20K. You then take the CGT discount and have a capital gain of $10K. But, because you have not received any money for these shares personally, you could potentially claim a deduction personally of $50K to offset your business income.

    This works in som eother situations, but this is one of the more common benefits. This will work the same in the future, but from the point of view of the transaction, this will need to be done through a broker, so it just adds another $20-$60 to the transaction.

Viewing 5 posts - 1 through 5 (of 5 total)
  • You must be logged in to reply to this topic.