The egg is on the faces of SMSF critics. Anything new gets its fair share of criticism, but some prove they thoroughly deserve a day in the sun. SMSFs are just such an example. I am not saying that SMSFs do not underperform, but somewhere it can be put down to the lack of effort or know-how of the trustees. Good that there is no shortage of techniques to boost the performance of your SMSFs. Here is discussing a few:
Acquiring business premise through SMSFs has huge tax advantage
Acquisition of business premises through your SMSF is not new. You are eligible to borrow against a new property purchase and use your super funds money as part of the purchase price. This means you do not have to cough up the full purchase price – this is a newer development. It’s called a Limited Recourse Borrowing Arrangement. When you make loan repayments, you effectively get tax benefits funded by tax-deductible contributions to super.
With 30% tax deductions, you only pay 15% tax on your rental income. This is when you are in a company structure. Alternatively, when you are in a trust structure, you are perhaps wading through an exorbitant tax rate climate. This means that you are in a position to enjoy even higher tax deductions.
And a major bonus, individuals over the age of 55 can free from paying any capital gains tax if they decide to sell off their SMSF’s property and move on. You just need to have your fund setup correctly when you sell the property.
Earn through pensions
Go into the pension mode if you are on the other side of 60. This way, any earning made by you from investments backed by pension will be completely tax-free. To put things in perspective, imagine a $200,000 pension account making 6% a year. The tax savings you make is a cool $1,800 each year in this case. If you’re over 55, you may still benefit from a pension strategy.
File tax returns in time
If you have amassed a lot of franking credits from your investments, you can use tax refunds to your advantage by lodging returns early. Similarly, placing your cash in a high-interest rate account can also see you smiling your way to wealth creation.
That’s only a few ideas. There are many more!
How do you boost the performance of your SMSF?
