In this edition of It depends, senior associate Keeghan Silcock discusses whether you can make an in-specie contribution to your self-managed super fund.
Video Transcript
Hi, my name is Keeghan Silcock and welcome to another edition of It depends. Today, I'll be talking about whether you can make an in-specie contribution to your self- managed super fund.
Can I make an in-specie contribution to my self-managed super fund?
So, it depends. An in-specie contribution is effectively the transfer of assets to your self-managed super fund to satisfy that contribution, rather than a transfer of cash. The first thing you need to consider is whether the asset is something that can be acquired by the self-managed super fund without breaching section 66 of the SIS act. For example, business real property or listed shares or units in a widely held trust. You need to be comfortable also that the contribution won't breach the contribution rules. If you're transferring business real property, it would be important that you have an independent valuation there to confirm the market value of that asset. Where the asset is being transferred from a related party to the self-managed super fund, rather than the member itself, to ensure that that's still properly treated as a contribution, we'll need to prepare some documents to reflect that structure.
Another very important consideration is what are the tax and duty implications of that asset transfer for the party making the transfer for CGT purposes, and also for the SMSF in terms of whatever duty liability that transfer might trigger. Unfortunately, in Queensland there is no duty exemption available for a transfer of assets into a self-managed super fund. However, where we're having a transfer from a trust to the SMSF, trust cloning might be an option. If you're in another state or territory for assets in another state or territory, then there may be a duty exemption available. Lastly, there are some contributions which you cannot make as in-specie contributions. So, for example, one of those is where you're making a contribution under the CGT lifetime cap. And what you're wanting to use is the transfer of assets that's triggered that CGT liability as the in-specie contribution, that's not possible. So, there are clearly a whole host of issues that you need to consider when making an in-specie contribution of assets. You need to be checking the SMSF trust deed to make sure that this is permitted. You also need to be checking the investment strategy for the SMSF to make sure that it contemplates the acquisition of that asset. And we really recommend that you seek advice at the time and properly document that contribution. If you have any questions, please feel free to reach out to a member of our team.
Cooper Grace Ward is a leading Australian law firm based in Brisbane.
This publication is for information only and is not legal advice. You should obtain advice that is specific to your circumstances and not rely on this publication as legal advice. If there are any issues you would like us to advise you on arising from this publication, please contact Cooper Grace Ward Lawyers.
