Superannu-nationals
Ah yes. The Coalition has gotten back together. The best of the worst and the worst of the best have rejoined to make the cream of the crap.
As may be apparent to Sparty-Cast readers, Sparty is a big consumer of news. And the 2 big things (or at least 2 of the big things) that have been taking up media oxygen this week have been the Coalition split/recombination and the idiotic superannuation tax proposed by the Labor government.
Sprinkled among the many articles about the superannuation tax have been references to the impact on those with homes and farms inside their super funds. Homes? Farms? What?
How did this happen. How did a farm owned and worked by a superannuant get into their super fund.
Can other people shift their small-medium business into their super fund?
Not doubt it was one of the standard National Party “conessions” extracted from many of the Coalition governments of times past. Probably one of the many stupid things the Dessicated Coconut agreed to.
But here is my second question. Why is not one of the 4 big policy issues that the National Party demanded for their participation in a Coalition? Riddle me that?
Why did not David Littleproud and Bridgit McKenzie demand all guns on this policy?
Could it be that there are no ribbon cutting opportunities?
So much for princples. By hey. They got their supplements. Their salary supplements for be in the shadow cabinet.
Going by what you've written here, this may come as a surprise to you, but yes indeed, you CAN actually hold your own business property in a self-managed superannuation fund.
Not the BUSINESS operation itself; only the property it runs from. Usually the business entity would rent the property from your SMSF.
AFAIK, this has been the case ever since Paul 'L.A.W. Tax-Cuts' Keating, whom for some unfathomable reason you apparently consider the country's best Treasurer, introduced compulsory super back in the early 90s and even before self-managed super funds started being called that.
Exactly why that exemption from related party rules came about, only the 'experts' at Treasury may know, by being, perhaps, able to trace their old, archived records.
This particular rule only applies to business property; if you have a residential investment one, you are by law prohibited from using it personally or allowing any related parties to do the same, even if market rents were to be charged. In other words, you can't generally have the house you live in your super fund - even if you do operate a business from a part of it.
Having farm properties in SMSF entities simply acknowledges that the occupancy of such is incidental to the fact you are usually located in a remote area, so commuting from elsewhere would be problematic.
Labor has always hated self-managed funds for this one main reason - namely that you can own direct property in one. And, more recently, that SMSF entities can actually borrow to acquire property assets, even though the rules on that are ridiculously complicated and it is more expensive to do that than outside of super.
This is one major area their industry funds cannot compete and consequently have, over the years, lost many of their top clients to the SMSF space.
Furthermore, Labor also hate farmers, so this unrealised gain tax is perfect to both punish SMSF property owners AND the farmers as well. Win-win! Whatever it takes!
Without getting overly technical, let me also add that having farm or even just ordinary business properties in a SMSF can be a valid asset-protection strategy, so it's not all just about the potential tax advantages.
In that particular space though, both LIB/LAB have over the years done their best to invalidate such arrangements, so it's now mostly not worth doing.
And lastly, both LIB/LAB always need/want more revenues. SMSF owners tend to be better off as well as more independent types that the usual Australian tax cattle, so punishing them and getting more money out of them ticks all the boxes.