10 facts you may not have known about Superannuation

1. SMSF Borrowing

It is fairly common knowledge nowadays that superfunds can borrow.  What is less known is that there are no restrictions on who superfunds can borrow from.  Assuming that the loan is structured in a compliant manner, SMSF members can lend moneys to their SMSF.

2. Temporary Incapacity

If you salary sacrifice contributions into super, this component is available to be paid to the superannuation member in the event that they become temporarily incapacitated.

3. Anti-Detriment

It is possible for superannuation lump sum death benefits to be increased by including the tax the member paid on taxable contributions (e.g. employer contributions), this is called an anti-detriment payment.

4. Adult Children

Adult children are typically not superannuation tax dependants. Death benefits paid to adult children can attract up to 17% tax inclusive of the Medicare levy surcharge.

5. Superannuation funds can run a business

A superannuation fund can run a business.  Whether it should, is an entirely separate question.

6. Individual Trustees Penalties

Superannuation penalties are levied per trustee. So an SMSF with two individual trustees would pay double the penalties than an SMSF with a corporate trustee. So yet another reason for an SMSF to have a corporate trustee.

7. SMSF Lending

It is possible for super funds to lend moneys to related (the relatives of the members of the SMSF) non-individual entities of a superannuation fund, where the size of the loan is less than 5% of the value of the gross assets of the lending superannuation fund.

8. SMSF and registering for GST

Super funds can register for GST even if they are not carrying on an enterprise.

9. SMSFs can borrow for shares and managed investments

Superfunds can not only borrow for property they can borrow for shares and managed funds.

10. Double Deductible Super Contributions

Is it possible for a superannuation member to have concessional contributions double that of their caps in a given financial year without triggering their caps. This can be done if the member’s superannuation fund has a contribution reserve and is dependent on the timing of the contributions.

Our Comments

The above facts are intended to be thought provoking. We would strongly recommend seeking specific advice before implementing any of the above strategies.

By: March 1, 2016 Superannuation, SMSF Tags: , ;