Can you contribute to super with something other than cash?

Posted on: February 4, 2014
Posted by: Bob Budreika

Use superannuaton to buy investment propertyI’m sure that most people would think that cash is the only way to contribute to superannuation.  This is by far the most common way but isn’t the only method.  Assets such as shares and real estate can also be contributed to superannuation as an in-specie transfer.  This can be a handy strategy if you don’t have the available cash to contribute and don’t want to sell assets.  The contributed asset might also qualify for a tax deduction up to the limit of $25,000 per year for someone under 60 and $35,000 for those older.

While this sounds easy enough you should do your homework first and assess the advantages and disadvantages.  Assets other than cash could be subject to capital gains tax because there is a change of ownership and this could be costly.  Stamp duty, as well, will be charged on most property transfers.

One of the major factors to consider are the maximum member contribution limits.  Contributing an asset like property could potentially throw the member into excess contribution territory.  This is something to avoid because penalty tax could be charged and make the exercise a disaster.

One of the benefits of contributing assets other than cash is that the earnings of the fund are taxed at a maximum rate of 15% and 0% when held in a pension fund.  Most retail and industry super funds don’t cater for in specie asset transfers so you’d need a self managed super fund to take advantage of the strategy.

 

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