A self-managed super fund (SMSF) is an attractive proposition, as it provides more flexibility and control over the investment of your superannuation money. As a small business owner you may be able to purchase property via your SMSF, but there are other investment options worth exploring.
Buying Your Business Premises
Having more control over where you invest your retirement funds is one of the benefits of having an SMSF, and buying property is one of the most popular investments for SMSF trustees.
In fact, some people set up SMSFs primarily so they can invest in residential property, but for small business owners there is another important option. Did you know you can also potentially purchase your business premises?
The benefit of doing this is that you can buy your business property and pay rent directly to your SMSF at the going market rate. While your SMSF is able to borrow up to 70% of the cost of a commercial property, it important to familiarise yourself with your legal requirements when you take out a loan from a third party lender.
Diving into the Share Market
Having a portion of super in shares is another popular option for SMSFs and a great way for small business owners to build their retirement savings and save tax at the same time.
There are many ways to buy shares cheaply and, like other investors, people with SMSFs can use the services of brokers, fund managers or financial advisers to invest on their behalf in a range of investment vehicles, such as individual shares, exchange traded funds (ETFs) or listed investment companies (LICs).
Another option is the mFund, which was launched by the Australian Stock Exchange (ASX). It provides investors with a low-cost way of accessing unlisted managed funds.
Investigate the different products available, because you could save on the all-important fees and charges. And don’t forget to do some research on the possible tax savings that can come from holding shares in your SMSF.
Small business owners may also want to consider investing in collectibles via their SMSFs. Purchasing items such as artwork, jewellery, coins, antiques, vintage cars and wine are popular options.
However, there are strict rules about holding these types of assets in your SMSF – they must be insured and cannot provide any day-to-day benefit.
For example you cannot display the artwork in your business premises, drink the wine at a work event or drive a vintage car. However, a person who is not a related party can drive the vehicle for such a purpose and you can lease collectibles to an unrelated party (such as a gallery) if the party is at arm’s length.
If the collectibles were acquired before 1 July 2011, you have until 1 July 2016 to meet the requirements.
For those with an SMSF, there are numerous ways of getting your superannuation funds working harder and helping to grow your business at the same time. But as with every investment, it’s important to weigh up the rewards and the risks. With proper research and a good investment strategy, your SMSF could reap the benefits.
This information is factual only and is not intended to imply any recommendation about any financial products or constitute advice. You are responsible for consulting with your own professional tax advisors and financial advisors concerning specific tax or financial circumstances for your business. Intuit disclaims any responsibility for the accuracy or adequacy of any positions taken by you in your business finance. If you have questions regarding accounting issues specifically related to your industry or your business circumstances, you should consult with your own professional tax advisor, accountant, attorney, industry expert or professional association.