Do you operate a business and have an SMSF?

Many small business operators have an SMSF and operate a small business. With mounting bills and declining revenue, they cannot see the light at the end of the tunnel.

If you feel that your business is a viable business over the longer term you may consider borrowing monies from your SMSF. 

A superannuation fund is permitted to lend up to 5% of its assets to a related party. The ATO calls this a related party transaction or an investment in an in-house asset.

An in-house asset is any of the following:

  • a loan to, or investment in, a related party of your fund
  • an investment in a related trust of your fund
  • an asset of your fund that is leased to a related party

Also, you may be aware that each member of a superannuation fund is permitted to withdraw $10,000 prior to 30 June 2020 and $10,000 after 30 June 2020.

Another strategy you could consider is selling shares to your SMSF for cash. For example, you may own $100,000 of shares. You prefer not to sell the shares now while the market is low but you do need cash for the business. You believe the shares still remain a viable long term investment. In your SMSF you may have, say, $100,000 of cash or term deposits. You could consider selling your shares to your SMSF at market value $100,000 in return you receive the $100,000 in cash from your SMSF and your SMSF gets the shares in return.

Note, if these shares cost less than their current market value you may be subject to Capital Gains Tax. Conversely, if the shares cost more than their current value then you will realise a capital loss in your personal tax return.

Should you require more information about accessing your superannuation or improving the cash flow of your business, please feel free to contact Peter Quinn by submitting an enquiry or calling us on +61 2 9580 9166.