shift to better super shift to lower tax shift to a brighter future
TRANSCRIPT
Shift to better super Shift to lower tax Shift to a brighter future
Who are the 2020 Group?
For those of you who don’t know us..We are an affiliate partner of Starr Partners. We
are an independent, free thinking, multi disciplinary firm, made up of self managed
super fund specialists, accountants, solicitors, financial advisors and other specialists.
Seminar Purpose
The purpose of this seminar is to educate you that you now have a choice to be able to
create real wealth for your family using an SMSF/SuperShift.
Surrounding ourselves with good advice and people who provide good advice is an
important part of this process of achieving real choice and moving towards financial
freedom.
Price Versus Cost
Outside Super
Price (Net income)$100.0
0
Tax (46.5%) $87.50
Cost (Gross Income)
$187.50
Inside Super
Price (Net income)$100.0
0
Tax (46.5%) $18.00
Cost (Gross Income)
$118.00
Let’s start with actually understanding what super is:
It’s a tax structure, not an asset class.
Combine the best tax structure with your choice of asset class – property.
The MythThe
Truth
Key Issues
Why purchasing investments inside of superannuation is often a better fit – due to the significant tax advantages that exist – than the traditional way of purchasing assets outside of
super in your own name, a company, or a trust.
I will demonstrate 3 significant advantages. Lower tax, better cash flow, more safely
protected investments.
We will provide details on how Superfund's and more specifically how SMSF’s can
borrow.
We will show you how an Average Australian Family with potentially as little as $100K in
Super can leverage into the property market and how this property(s) may be a self
sustaining investment that you may never pay any lump sum tax on.
Aussie Love Affair with Property
We can have our cake and eat it too by owning property in our own family super
fund.
How many of you knew you could buy property in your SMSF and borrow against
the security of that property?
How can I take advantage of these amendments
and make the SuperShift?By taking control of your super and setting up an SMSF!
Buying property through your SMSF not only enables you to leverage your current superannuation assets, it also
provides the added benefits of both asset protection and tax efficiency.
Benefits of an SMSF
An SMSF is your very own super fund in which you are in control of.
You have the cheque book and with the help of your accountant or advisor run the fund and make decisions
on suitable investments.
CONTROL
Holding assets in a Superannuation fund can protect those assets from commercial and
litigation risks that you may otherwise face.
ASSET PROTECTION
So what’s so great about SMSF’s being able to invest in property?
The simple answers are:
Is that you now don’t need to have the available cash in your fund to obtain an interest in a long term investment asset
class such as property. Up until the recent changes in SIS, many
superannuation portfolios were devoid of the many potential benefits of direct
property investment due to their inability to borrow property.
How Does It Work?
The choice of property is purchased in name of the trustee of a bare trust that is setup with the client in
control as trustee Directors.
This trust is the legal owner of the property. The SMSF is of course the beneficial (or real) owner of the property.
Legal Issues
The Lender who lends your SMSF the funds is granted a charge over the SMSF’s beneficial
interest in the property, this is a limited recourse loan and does not subject other
property or assets as security for the loan.
80% Leverage
YOUR SUPER BALANCE$100,000
BANK MONEY$400,000
TOTAL INVESTMENT
$500,000
James is 45 years old and earns $70K p/a and his Industry Super Fund balance is currently $50K. Jill, James’ wife, is also 45 and
earns $30K pa. Her industry superfund balance is also at approximately $50K. They own a principal place of residence
(PPOR) worth 600K, debt $300K = $300K in equity.
Case Study
They wish to purchase an Investment Property (Cost $350K)
Property Options
Negative Gearing SuperShift
Scenario
Property is sold in 10 years for $700,000
The Facts
Negative Gearing Effect:
Tax payable on sale: $100,000
SuperShift Effect:Tax payable on sale: NIL
The Results
$100,000 better off by choosing to SuperShift, if property sold after age 55.
Price Versus Cost
Price vs. CostOutside
SMSFInside SMSF
Purchase Price (of Investment Property)
$500,000 $500,000
Deposit (Price) $140,000 $140,000
Deposit (Cost) $261,682 $164,706
Loan (30 Years) $360,000 $360,000
Total Repayments (Price) $302,060 $302,060
Total Repayments (Cost) $649,592 $355,365
Total Cost $911,275 $520,071
Advantage $391,203
Property Value $1,000,000 1,000,000
CGT $116,250 0
Overall Advantage $507,453
Shares Versus Property
Other Benefits to You
Get more skin in the game! With the purchase of a long term growth asset of your
choice, by taking control of your existing super.
Increase the real rate of return on your super by leveraging. Super gearing rather than
negative gearing is good debt. Take on good debt in super as opposed to negative
gearing, where you fund a loss.
Let someone else pay off your loan. Use a combination of the rent on the property and
your SGL (if a PAYG earner) to pay off the property. Salary Sacrifice for further benefits and to build a surplus of cash in the fund and continue to accumulate suitable assets in a
SMSF.
Leveraging with Property in your super fund can be substantially better than leveraging into equities, based on both asset classes
achieving the same positive return. Banks will lend at a higher LVR for property. Pay a lower
than 15% tax rate on super contributions, even nil.
Quarantine any capital gains on investment assets to nil. Purchase now and sell after age
55, no tax. There is a maximum of 10% capital gains tax on the sale of your property
if it is held for over 12 months in the accumulation phase i.e. sell prior to age 55.
Build up a portfolio of assets that will work for you in retirement – no tax on the
earnings or growth of assets held in super after age 55.
BENEFITS OF AN SMSF
By salary sacrificing into your SMSF, you effectively receive a 100% tax deduction at your full marginal
rate of tax on contributions made up to your contributions cap (note: salary sacrifice
contributions may be subject to up to 15% tax.
The interest expense along with other property related expenses including any depreciation
allowance become 100% tax deductible within the superannuation fund and may potentially reduce the amount of your 15% contribution tax to NIL.
This is not possible in a non SMSF super structure.
You may potentially receive a more tax effective retirement income as compared to
property investment held outside of superannuation as once you are over the age of 60, there is ZERO TAX on withdrawals and pension income from your superannuation;
Your SMSF, as the beneficial owner of the property asset, enjoys the Land Tax Free
Threshold in each Australian State.
New Draft Rule
SMSF’s can renovate investment properties under limited recourse loans! What does
this mean for You?
All of this can be funded directly from the SMSF, with no out of pocket costs to you.
Add VALUE to your investment property by renovating or adding extensions!
HOW IT WORKS
Our Promise to You
We will present to you within seven days of our initial meeting our expert analysis and opinion of your current situation and guide
to the future ‘journey’ we believe you should take.
Is it time perhaps that you arranged a free, no obligation consultation with out
strategic advisors?
Have you ever thought: Is my current accountant providing me with a complete
financial solution?
Would you like a second opinion? Do you see the opportunities and want to take control? Do you want to build wealth through tax effective structures?Do you want to investigate all your
retirement options?
Thank You
We hope this seminar has been of some benefit to you and perhaps opened your mind
to the possibilities that exist with strategic planning. The opportunity is yours for the
taking!
We further hope that you may consider forming a strategic alliance with our firm and
that we may be of assistance to you in the future.
Disclaimer
Although all care has been taken to provide the most up to date information, no
guarantee is given as to the accuracy of this information.
These examples shown herein do not constitute financial advice of any kind. They
are provided solely for the purpose of illustrating and contrasting the effects of
using super as a general strategic strategy.
Make the SuperShift today
1800 46 2020For further information please contact our
office