Structure your assets for maximum benefit
Many business owners struggle with whether to hold their business assets as an individual or as a company. However, for many reasons, holding assets in a Self Managed Superannuation Fund (SMSF) can be a better strategy.
This strategy suits business owners who want to legally minimize their tax and accumulate business assets for their eventual retirement.
Let’s compare the difference between holding the assets in an individual’s name versus a company versus a self managed superannuation fund.
As an individual it is simple and it allows you to have complete control over these business and/or investment assets. However, the earnings on the income from these assets will be taxed at your marginal rate which may be as high as 46.5%. From a capital gains tax perspective if the investment assets grow in capital value they will be subject to tax also at your marginal rate of tax, however, you will be eligible for a 50% discount on the capital gain tax where you have held those assets for greater than twelve months.
If the assets are held in a company the earnings on the investment and business assets will be taxed at 30%. Furthermore, any growth in the capital gain of these assets will be subject to 30% capital gains tax, regardless whether you hold the investment for greater than twelve months.
If the assets are owned by the superannuation fund, the earnings will be taxed at 15% and the capital gains tax rate will be at 10%. Therefore, your investments in a self managed superannuation fund are likely to be taxed at a lower rate of tax then if they were in the name of a company or yourself personally.
Furthermore, assets in a superannuation fund are protected from creditors, whereas investments in your name or your company’s name generally are not.
Quinn Financial Planning has the expertise to help you build your wealth. For more advice on investing in a Self Managed Super Fund, contact Peter Quinn here at Quinns by submitting an online enquiry or calling us on +61 2 9580 9166 to book an obligation free appointment.