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I have a client that wishes to transfer a commercial property from their family trust to their SMSF. The Family Trust has beneficiares loan (family members same as SMSF) greater than the value of the property. Can the client consider the transfer of the property as an in specie superannuation contribution to super and repayment of the beneficiares loans
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Hi Robert
My view is that a NCC technically cannot be made from a Family Trust to a SMSF. A NCC needs to be made by the member (or by the spouse of the member). To do what is being proposed the property should be transferred from the Family Trust to the individual and then from the individual to the SMSF.
The trustees need to consider the requirements of SIS Regulation 7.04, the contribution rules.
Further a member contribution is defined at SIS Regulation 5.01:
"member contributions, in relation to a member of a regulated superannuation fund, means contributions by, or on behalf of, the member to the fund, but does not include employer contributions made in respect of the member."
The Division 7A tax rules are complicated so any transfers from a Family Trust should have the tax impact reviewed. The property transfer should be able to be used to repay the loan accounts assuming the Trust deed allows for it.
My view is you should get a superannuation lawyer to work through the above and get the correct process re the transfer of the property to the SMSF and that all stamp duty and tax considerations are reviewed.
Thanks
SMSF AAA