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fair back on calendar
The Property Connection Thinking of borrowing money to invest in property through a self managedsuper fund (SMSF)? We explore some of the ins-and-outs involved. More Australians are looking for greater control over their super.There are currently more than 490,000 self managed super funds (SMSFs) in Australia with combined assets exceeding $470 billion1. What’s more, low returns2 from many super funds and recent high levels of sharemarketvolatility, combined with the perceived stability of the property sector are resulting in more Australians considering buying an investment property through SMSFs. What property can an SMSF buy? If you have an SMSF, you can use it to buy residential or commercial property. Any property the SMSF buys must meet the fund’s sole purpose test, that is, to provide retirement benefits to its members. • Residential – The family home cannot be bought with your SMSF’s assets. However, the SMSF can buy an investment property that is rented out to tenants, who are not fund members or their relatives. • Commercial – SMSFs can also buy commercial property, including your business premises. The property still needs to meet the fund’s sole purpose of providing retirement benefits to its members. So, the return from the property through rent and growth must be the focus for making the investment. Borrowing through super This is generally only available in SMSFs, and strict regulations govern borrowing to purchase property within an SMSF, and loan conditions are different than those for regular housing loans. The maximum loan amount relative to property value will generally be lower, and a range of conditions and risks need to be considered. For example, the property must be held in a special arrangement known as a limited recourse borrowing arrangement. Under this arrangement, the property must be kept separate from the fund’s other assets. This ensures that if the fund defaults on making its loan payments, the lender has access to the property held as security for the loan, but not to other fund assets. Where an SMSF borrows to buy a property, a security trust needs to be established recognising the beneficial interest of the SMSF and the rights of the lender. The trustee of this security trust holds the property in trust with the SMSF as the beneficial owner. The pros and cons Investing in property through an SMSF has advantages and disadvantages. • Control and flexibility With greater control over your super investments, you can manage your financial future to a greater extent through an SMSF. Also, an SMSF trustee has the flexibility to choose any type of investment (including a specific investment property) that is consistent with the fund’s investment strategy and suits the needs of the fund. • Tax savings If you buy and hold property within your SMSF until you retire, it will generally be exempt from capital gains tax and income tax (for any rent received) when your super enters the pension phase. Before you retire, any rental income generated will be taxed at a maximum of 15% and capital gains tax of up to 10% will be applied if you sell the property after one year. • Diversification When your SMSF invests in property and other
asset classes, you may stand to gain from the benefits of diversification and increased financial security in the long term. • Costs You may save on investment management fees if you choose to manage your own super, but it can be costly to set up your own SMSF and meet annual compliance fees. And when you borrow to buy property within your SMSF, it generally costs more than borrowing as an individual. • Regulatory responsibilities Managing investment property in your own super fund, particularly where borrowing is involved, requires the trustee(s) to meet specific regulations. There could be serious penalties for compliance breaches. • Viability You generally need a larger deposit to buy a property in super than in your own name. It is generally not cost-effective to manage your own super or buy investment property through an SMSF, unless your SMSF has a total balance of at least $200,000.
Back for the first time in several years, the fondly remembered Hamilton Gray Street Primary School Country Fair returns Saturday, October 26, to delight another generation of children and families alike. The Country Fair will be hosted by Hamilton Gray St Primary School on their CBD Campus, corner Gray/Kennedy/ French St in Hamilton. Featuring all the memories of a traditional country fair, event goers will be welcomed by scarecrow competitions, homemade
or friend of the school or want to enjoy an afternoon of old fashioned country hospitality and good fun for the whole family, come on down to the Hamilton Gray Street Country Fair at 12pm on Saturday, October 26. Entry is free. Above - Hamilton students welcome the return of the scarecrow competition as part of the newly resurrected Hamilton Gray Street Primary School Country Fair.
leukaemia foundation fundraiser
(Endnotes) 1 Source: Australian Taxation Office.Self managed superfunds statistical report (December 2012). ato.gov.au. 2 According to the Australian Prudential Regulatory Authority (APRA) annual superannuation figures to 30 June 2012, in the 10 years to 30 June 2012, the industry-wide rate of return for large funds was 4.4% pa. Public sector funds recorded 5.5% pa, industry funds 5.1% pa, corporate funds 4.8% pa and retail funds 3.4% pa.Source: APRA media release 9 January 2013.
OCTOBER 11 AUSSIE MUSCLE CAR AUCTION - Entrepreneurial Bogan’s Car 69 - 6pm start Three course dinner & auction - $40 a head - Quality Inn Presidential Numbers limited - bookings essential - (08)8724 9966 All proceeds to Leukaemia Foundation Enquiries call Mick Mullan on 0408 656 699 or Tom Stokker on 0418 849 919.
What you need to know Any advice contained in this article is of a general nature only and does not take into account the objectives, financial situation or needs of any particular person. Therefore, before making any decision, you should consider the appropriateness of the advice with regard to those matters. If you decide to purchase or vary a financial product, your financial planner, our practice, AMP Financial Planning Pty Ltd and other companies within the AMP Group will receive fees and other benefits, which will be a dollar amount and/or a percentage of either the premium you pay or the value of your investments. You can ask us for more details.
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Source: Australian Taxation Office.Self managed superfunds statistical report (December 2012). ato.gov.au. According to the Australian Prudential Regulatory Authority (APRA) annual superannuation figures to 30 June 2012, in the 10 years to 30 June 2012, the industry-wide rate of return for large funds was 4.4% pa. Public sector funds recorded 5.5% pa, industry funds 5.1% pa, corporate funds 4.8% pa and retail funds 3.4% pa.Source: APRA media release 9 January 2013.
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food stalls, 30 undercover stalls of beautiful things, kids rides, amusements, show bags, an animal farm, car displays, a haunted house, live music, fairy floss, kids activities, books, plants, preserves, toys and so much more. The Country Fair will showcase the very best of the Hamilton Gray St school community and funds raised will continue to implement the school’s landscape master plan with priority given to replacement of playground equipment. So if you’re a past student, parent
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bin reminder
The City of Mount Gambier wishes to remind all members of the community that council has recommenced the distribution of new bid lid stickers on both rubbish and recycling bins across the city. Operational services director Daryl Sexton said “n order to make sure that every rubbish and recycling bin in the city received a sticker, council was asking all residents to have their bins out by 6am on their collection day, and leave them out until 5pm. “Both the rubbish bin and recycling bin should be put out, regardless of whether they are full or not,” Mr Sexton said. “Residents are being asked to do this until the end of October.” The new bid lid stickers tell you what can and cannot go in each bin, with the colouring of stickers designed to make it easier to identify each bin and its acceptable contents. “The new bin lid sticker campaign is part of council’s efforts to reduce contamination in Mount Gambier’s bins and conserve resources,” Mr Sexton said. Currently almost 60% of the contents of the rubbish bins should be going in either the recycling bin, or the organics bin. That equates to over 3200 tonnes of material that should have been recycled or composted, being sent to landfill every year. Residents can save the community a significant amount of money by putting their waste into the correct bin. They will in turn help the environment, as organic waste in rubbish bins goes to landfill and creates leachate, which has the potential to cause groundwater pollution. Organic waste in landfill also creates greenhouse gas emissions. For further information please contact City of Mount Gambier environmental sustainability officer Aaron Izzard on (08)8721 2528 or aizzard@mountgambier. sa.gov.au.