Edith has heard that it is possible to move shares into superannuation when you are nearing retirement. What are the benefits of doing this?
I am getting close to retirement age and I was speaking with a friend who is already retired and she said it was possible for me to move my current share portfolio across into my super fund? Is this correct and is this something that I should consider?
A. Your friend is right. Not all contributions into your superannuation need to be made in cash. It is possible to make ‘in specie’ contributions into your super, which can include shares, managed funds and real estate, for example.
To assess the benefits of making these types of contributions into your super fund, we spoke to senior financial planner at Creation Wealth Andrew Zbik about who was best to consider making these types of contributions.
“The benefits of this strategy are that you can continue to hold your shares and move the ownership of that holding into the superannuation environment which has a lower tax rate compared to the marginal tax rate,” Mr Zbik said.
“Plus, if the shares are being transferred at a price lower than what you paid for them there will be no capital gains tax payable.”
Mr Zbik said there were a few things to consider before making this move.
“Making an in-specie transfer of shares from your own name to your superannuation fund is a capital gains event. This means that if you are transferring the shares at a higher value than what you purchased them [for], you may need to pay capital gains tax,” he explained.
“If you are transferring the shares at a loss, it means you will retain that loss on your tax return, which can be used to offset future capital gains.
“So, for some, it may be an opportune time to contribute these shares to your superannuation fund to allow future gains to be made in a concessional tax environment that is superannuation.”
He also explained that it was important to choose an exact date for the transfer to take place and to properly report the true value of the shares on that day as your sale/purchase price.
He also said you should only consider using this strategy if you anticipate that you will continue holding these shares for the long term.
“Most members of SMSFs will be able to use this strategy,” Mr Zbik explained. “Some retail superannuation funds will accept shares as an in-specie contribution.
“Unfortunately, most industry funds are not able to receive in-specie contributions of shares yet, but several are investigating this as an option in the future.”
It is also worth noting that transferring shares into superannuation will most likely count towards your non-concessional contribution cap, which is currently $110,000 for this financial year or $330,000 if you bring forward three years of contributions and you are aged under 67.
Have you considered moving your shares into your super? Have you spoken to a financial adviser about the benefits of doing this? Why not share your thoughts in the comments section below?
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Disclaimer: All content on YourLifeChoices website is of a general nature and has been prepared without taking into account your objectives, financial situation or needs. It has been prepared with due care but no guarantees are provided for ongoing accuracy or relevance. Before making a decision based on this information, you should consider its appropriateness in regard to your own circumstances. You should seek professional advice from a Centrelink Financial Information Services officer, financial planner, lawyer or tax agent in relation to any aspects that affect your financial and legal circumstances.