Self managed super funds (SMSFs) are the fastest growing products in the superannuation industry today. SMSFs offer a number of advantages and benefits that appeal to individuals. These include the freedom to choose investments, the flexibility in determining the tax position of the fund, estate planning, pension planning and asset protection, among others. There is one benefit that is particularly attractive and can help business owners who opt for SMSFs: you can use your SMSF to buy property that you can then lease out to your business.
You can use the existing balance on your SMSF, or you can use your SMSF to borrow additional funds to purchase property for your business to use. Your business may not enjoy any advantage from reduced rental cost; it will still need to pay full market rent. However, there are other ways that both your business and your self managed super fund can benefit from this arrangement.
First of all, there is the stability brought about by the fact that your SMSF owns the property your business rents. There is no danger of a landlord not renewing your rental contract, and so your company is spared from the inconvenience and cost of relocation.
Having this sort of stability frees the business from having to purchase its own premises, thus freeing up more capital that can be used for other, more critical requirements. Your business does not need to forego purchasing equipment or making new hires in order to meet property payments.
The main benefit for your SMSF, on the other hand, is that you get a stable tenant that will take care of the property and pay rental on time.
These advantages can make the SMSF an ideal instrument for business owners seeking both personal financial growth and business benefits.
Independent Financial Advisor
Stephan Strategic Director Joe Stephan, a Certified Financial Planner specialises in investment planning and risk management and insurance. With interests in client related communications and efficiency in provision of financial planning services, Joe has worked with both large institutional financial planning firms and smaller boutique practices which have provided a well rounded knowledge and expertise in various socio-economic groups.