POWERED BY MOMENTUM MEDIA
SMEs growing through SMSFs
Small and medium enterprises (SMEs) are taking advantages of record-low bank debt to grow their businesses through self-managed superannuation funds (SMSFs), according to RSM Australia.
The accounting and advisory firm's 2016 thinkBIG survey found there was a 25 per cent jump in the uptake of bank debt and may be attributed to an increasing number of SMEs buying their own premises.
RSM Australia's national head of business advisory, Andrew Graham, said SMEs were favouring buying office spaces, in the name of their SMSF, and leasing back to their business as the opportunity of owner-occupying was cheaper than leasing.
"What's driving SME appetite for office space are both historically low interest rates where money is cheap, and reduced concessional superannuation caps as more people attempt to shift funds into the lower taxing superannuation environment," Graham said.
Graham added that the prospect of higher rental yields and stronger capitals gains also made offices a more affordable alternative to declining residential property markets within most Australian capital cities, with provisions governing SMSFs helping to facilitate this outcome.
The survey said 40 per cent (up five per cent from the previous year) of surveyed SMEs were open to potentially using super for their business.
Graham said a third of SMEs ranked their satisfaction with super provisions highly.
"It could indicate growing realisation among business owners that superannuation is an effective way to either fund growth or purchase business premises with minimum risk," Graham said.
"It's important that SME owners — 38 per cent of whom state they'll need over $100,000 annually retirement — make the most of their superannuation options."
Graham noted that he expected more proceeds from business sales to find its way into superannuation.
However, the Federal Budget's proposal to limit after-tax contributions to $500,000 could mean some SMEs will not be able to contribute as much into super as they'd like.
Graham said some individuals could be able to receive a double tax deduction for contributions to their SMSF during the month of June if they adopt a "reserving strategy".
Recommended for you
The impact of identity theft and its threat to superannuation savings were highlighted in a case that went before the Federal Court at the end of 2023.
A recent NSW Supreme Court decision is an important reminder that while super funds may be subject to restrictive superannuation and tax laws, in essence they are still a trust and subject to equitable and common law claims, says a legal expert.
New research from the University of Adelaide has found SMSFs outperformed APRA funds by more than 4 per cent in 2021–22.
The SMSF Association has made a number of policy recommendations for the superannuation sector in its pre-budget submission to the government.
TOP PERFORMING FUNDS
ACS FIXED INT - AUSTRALIA/GLOBAL BOND
Fund name
3y(%)pa
1
Spire Oaktree Opportunities XI Second Close
61.07 3 y p.a(%)
2
Spire Oaktree Opportunities XI First Close USD
59.21 3 y p.a(%)
3
DomaCom Lot 21 Chellaston Road Munno Para West SA 5115 Australia
31.56 3 y p.a(%)
4
Fidante Credit Suisse Global Private Equity
31.06 3 y p.a(%)
5
DomaCom 4/27 Crombie Avenue Bundall QLD 4217 Australia
26.81 3 y p.a(%)
And that was quite reasonably the accountants only role in Superannuation - Business structuring.
Now because of the cost of their compliance to do that they might as well take up investment advice and get a practical income stream from it.....thanks Bill Shorten, this isn't good for planners..