Transcript Welcome [www.go2020.com.au]

Shift to better super u Shift to lower tax u Shift to a brighter future
Who are the 2020 Group?
For those of you who don’t know us..
We are an affiliate partner of Starr Partners. We are an
independent, free thinking, multi disciplinary firm, made up of
self managed super fund specialists, accountants, solicitors,
financial advisors and other specialists.
Seminar Purpose
The purpose of this seminar is to educate you that you
now have a choice to be able to create real wealth for
your family using an SMSF/SuperShift.
Surrounding ourselves with good advice and people
who provide good advice is an important part of this
process of achieving real choice and moving towards
financial freedom.
Price Versus Cost
Outside Super
Inside Super
Price (Net income)
$100.00
Price (Net income)
$100.00
Tax (46.5%)
$87.50
Tax (46.5%)
$18.00
Cost (Gross Income)
$187.50
Cost (Gross Income)
$118.00
Let’s start with actually understanding what super is:
It’s a tax structure, not an asset class.
The Myth
The Truth
Combine the best tax structure with your choice of asset
class – property.
Key Issues
Why purchasing investments inside of superannuation is
often a better fit – due to the significant tax advantages that
exist – than the traditional way of purchasing assets outside
of super in your own name, a company, or a trust.
I will demonstrate 3 significant advantages. Lower tax, better
cash flow, more safely protected investments.
We will provide details on how Superfund's and more
specifically how SMSF’s can borrow.
We will show you how an Average Australian Family with
potentially as little as $100K in Super can leverage into
the property market and how this property(s) may be a
self sustaining investment that you may never pay any
lump sum tax on.
Aussie Love Affair with Property
We can have our cake and eat it too by owning
property in our own family super fund.
How many of you knew you could buy property in your
SMSF and borrow against the security of that property?
How can I take advantage of these amendments
and make the SuperShift?
By taking control of your super and setting up an SMSF!
Buying property through your SMSF not only enables you to leverage
your current superannuation assets, it also provides the added benefits
of both asset protection and tax efficiency.
Benefits of an SMSF
CONTROL
An SMSF is your very own super fund in which you are in control of.
You have the cheque book and with the help of your accountant or
advisor run the fund and make decisions on suitable investments.
ASSET PROTECTION
Holding assets in a Superannuation fund can protect those
assets from commercial and litigation risks that you may
otherwise face.
So what’s so great about SMSF’s being able
to invest in property?
The simple answers are:
Is that you now don’t need to have the available cash
in your fund to obtain an interest in a long term
investment asset class such as property. Up until the
recent changes in SIS, many superannuation
portfolios were devoid of the many potential
benefits of direct property investment due to their
inability to borrow property.
How Does It Work?
The choice of property is purchased in name of the trustee of a bare
trust that is setup with the client in control as trustee Directors.
This trust is the legal owner of the property. The SMSF is of course the
beneficial (or real) owner of the property.
Legal Issues
The Lender who lends your SMSF the funds is granted a
charge over the SMSF’s beneficial interest in the property,
this is a limited recourse loan and does not subject other
property or assets as security for the loan.
80% Leverage
YOUR SUPER
BALANCE
$100,000
TOTAL INVESTMENT
$500,000
BANK MONEY
$400,000
Case Study
James is 45 years old and earns $70K p/a and his Industry Super Fund balance is
currently $50K. Jill, James’ wife, is also 45 and earns $30K pa. Her industry
superfund balance is also at approximately $50K. They own a principal place of
residence (PPOR) worth 600K, debt $300K = $300K in equity.
They wish to purchase an Investment Property (Cost $350K)
Property Options
Negative Gearing
SuperShift
Scenario
Property is sold in 10 years for $700,000
The Facts
Negative Gearing Effect:
Tax payable on sale: $100,000
SuperShift Effect:
Tax payable on sale: NIL
The Results
$100,000 better off by choosing to SuperShift, if property sold
after age 55.
Price Versus Cost
Price vs. Cost
Outside SMSF
Inside SMSF
Purchase Price (of Investment Property)
$500,000
$500,000
Deposit (Price)
$140,000
$140,000
Deposit (Cost)
$261,682
$164,706
Loan (30 Years)
$360,000
$360,000
Total Repayments (Price)
$302,060
$302,060
Total Repayments (Cost)
$649,592
$355,365
Total Cost
$911,275
$520,071
Advantage
Property Value
CGT
Overall Advantage
$391,203
$1,000,000
1,000,000
$116,250
0
$507,453
Shares Versus Property
Other Benefits to You
Get more skin in the game! With the purchase of a long
term growth asset of your choice, by taking control of
your existing super.
Increase the real rate of return on your super by
leveraging. Super gearing rather than negative gearing is
good debt. Take on good debt in super as opposed to
negative gearing, where you fund a loss.
Let someone else pay off your loan. Use a combination of
the rent on the property and your SGL (if a PAYG earner)
to pay off the property. Salary Sacrifice for further
benefits and to build a surplus of cash in the fund and
continue to accumulate suitable assets in a SMSF.
Leveraging with Property in your super fund can be
substantially better than leveraging into equities, based on
both asset classes achieving the same positive return.
Banks will lend at a higher LVR for property. Pay a lower
than 15% tax rate on super contributions, even nil.
Quarantine any capital gains on investment assets to nil.
Purchase now and sell after age 55, no tax. There is a
maximum of 10% capital gains tax on the sale of your
property if it is held for over 12 months in the
accumulation phase i.e. sell prior to age 55.
Build up a portfolio of assets that will work for you in
retirement – no tax on the earnings or growth of assets
held in super after age 55.
BENEFITS OF AN SMSF
By salary sacrificing into your SMSF, you effectively receive a
100% tax deduction at your full marginal rate of tax on
contributions made up to your contributions cap (note: salary
sacrifice contributions may be subject to up to 15% tax.
The interest expense along with other property related
expenses including any depreciation allowance become 100%
tax deductible within the superannuation fund and may potentially
reduce the amount of your 15% contribution tax to NIL.This is not
possible in a non SMSF super structure.
You may potentially receive a more tax effective
retirement income as compared to property investment
held outside of superannuation as once you are over the
age of 60, there is ZERO TAX on withdrawals and pension
income from your superannuation;
Your SMSF, as the beneficial owner of the property asset,
enjoys the Land Tax Free Threshold in each Australian State.
New Draft Rule
SMSF’s can renovate investment properties under
limited recourse loans! What does this mean for You?
Add VALUE to your investment property by renovating
or adding extensions!
All of this can be funded directly from the SMSF, with
no out of pocket costs to you.
HOW IT WORKS
1
2
3
4
Preparation of
a Statement
of Advice
Set up a SMSF
and trustee
company
Set up the
legal owner of
the property,
the Bare Trust
Find the right
loan
5
6
7
8
Draft the LR
Agreement
Vetting of
commercial
loan
documents
Conveyancing
team complete
conveyancing
and attend to
settlement
Find a
property that
matches your
selected
criteria
Our Promise to You
We will present to you within seven days of our initial
meeting our expert analysis and opinion of your
current situation and guide to the future ‘journey’ we
believe you should take.
Is it time perhaps that you arranged a free, no
obligation consultation with out strategic advisors?
Have you ever thought: Is my current accountant providing
me with a complete financial solution?
Would you like a second opinion? Do you see the
opportunities and want to take control? Do you want to
build wealth through tax effective structures?Do you want
to investigate all your retirement options?
Thank You
We hope this seminar has been of some benefit to you
and perhaps opened your mind to the possibilities that
exist with strategic planning. The opportunity is yours
for the taking!
We further hope that you may consider forming a
strategic alliance with our firm and that we may be of
assistance to you in the future.
Disclaimer
Although all care has been taken to provide the most up
to date information, no guarantee is given as to the
accuracy of this information.
These examples shown herein do not constitute
financial advice of any kind. They are provided solely for
the purpose of illustrating and contrasting the effects of
using super as a general strategic strategy.
Make the SuperShift today
1800 46 2020
For further information please contact our office