Contributing shares to your SMSF – Part 1

20/05/2016

Many investors have a personal share portfolio. When it comes to your SMSF, did you know that you can contribute more than simply cash? You are also able to contribute listed shares.

What are the advantages of transferring personal shares to your SMSF?

Tax benefits

  • Any dividends and capital gains received will be taxed at the concessional SMSF tax rate, rather than your higher marginal tax rate.
  • If the dividends are eligible for franking credits, those franking credits can be used to reduce the tax liability of the fund.
  • Any dividends and capital gains received by the SMSF may be tax free if the shares are used to help pay a pension to a fund member.

Asset protection

  • Assets held in SMSFs are generally protected from creditors in the event of bankruptcy.

Are there any disadvantages?

Transferring shares from your name to your SMSF will trigger a Capital Gains Tax (CGT) event and you could incur a CGT liability or crystallise a capital loss. Depending on your circumstances you may be able to apply the 50% individual CGT discount to reduce any capital gains tax liability.

We suggest you discuss the transfer with your tax adviser before going ahead.

Stay tuned for Part 2 where we provide a case study to demonstrate various options.

General Advice Warning: The advice provided is general advice only as, in preparing it we did not take into account your investment objectives, financial situation or particular needs. Before making an investment decision on the basis of this advice, you should also consider the relevant Product Disclosure Statement before making any decision relating to a financial product.


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