Buyer beware when acquiring assets from a related party

March 2021

The unforeseen, and rapid onset of the COVID-19 pandemic may have caught some individuals by surprise, especially if working hours were reduced or their income earning capacity was negatively impacted. 

For those individuals who have met the required conditions to release money from their SMSF, they may opt to increase pension drawdowns or access a lump sum withdrawal(s). However, for members who have yet to meet preservation age or a condition of release who want to access their SMSF savings, one option may be to consider selling personal assets to their SMSF to release some cash from their SMSF while at the same time helping to grow your retirement savings.

Alternatively, individuals may find that some of the assets they held personally have been impaired by COVID-19. This may present an opportunity to shift some of these assets into the SMSF so that in the aftermath of the global pandemic, as asset values recover, growth is achieved in the tax effective superannuation environment.

Whatever the driver for transferring ownership of an asset to an SMSF, there are specific rules around what a trustee can acquire.

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Disclaimer: The information contained in this article is provided for educational purposes only, is general in nature and is prepared without taking into account particular objective, financial circumstances, legal and tax issues and needs. The information provided in this article is not a substitute for legal, tax and financial product advice. Before making any decision based on this information, you should assess its relevance to your individual circumstances. While the SMSF Association believes that the information provided in this article is accurate, no warranty is given as to its accuracy and persons who rely on this information do so at their own risk. The information provided in this bulletin is not considered financial product advice for the purposes of the Corporations Act 2001.