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Business owners have been warned they may be missing out on significant tax benefits by renting commercial property rather than purchasing premises through their SMSF.
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Business owners forgoing 'significant' tax benefits
01 September 2014
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Mark Morcos, wealth management director at Ausin Group, said business owners may be missing out on millions by not investigating this strategy. Sixty per cent of business owners who seek advice are unaware of the “significant tax and financial advantages” associated with operating their business from a premises owned by their SMSF, he said.
“We believe that business owners are potentially being disadvantaged by not investigating the option of using an SMSF vehicle to purchase a business premises,” Mr Morcos said.
Mr Morcos said several tax benefits may be gained from placing a business premises into an SMSF, such as property expenses that include interest expense and depreciation allowances which are all tax-deductible.
“For many years, we have been advising clients about placing business premises into a SMSF,” Mr Morcos said.
“This strategy makes smart business sense as their dollars are put to work in an asset that can directly benefit them.
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“There is also greater business continuity with the asset and SMSF working together,” he said.
Ausin Group said commercial property is seen as a high-yield investment and hence rent can be used as a significant cash-flow injection directly into the fund, with fees generally being tax deductible.
The group also said that under the SMSF recourse borrowing arrangements, up to 70 per cent can be borrowed for business premises.
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