SMEs eye the ABCs of SMSFs in retirement

B2B Editor16 September 2016

SMEs eye the ABCs of SMSFs in retirement

Much of the whopping 25 percent jump in the uptake of bank debt recorded within our thinkBIG survey 2016, may be attributed to an increasing number of SME’s buying their own premises.

Having picked up on the rare opportunity of ‘owner-occupying’ being a cheaper option than leasing, more SMEs now favour buying office space in the name of their self-managed super funds (SMSF) and leasing back to their business.

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.

Cost benefits of ownership versus leasing premises aside, the prospect of higher rental yields and stronger capital gains (as demand intensifies) is also making office space a more affordable alternative to a declining residential property market within most Australian capital cities, with provisions governing SMSFs helping to facilitate this outcome.

Interestingly, 40 percent of SMEs within thinkBIG 2016 (up from 35 percent last year) are open to potentially using superannuation for their business. Attractive lease-back arrangements available to SMSFs could help explain why a third of SMEs ranked their satisfaction with superannuation provisions so 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.

For SME owners planning an exit strategy there is the ability for significant amounts from the sale of a small business to go into superannuation, utilising the non-concessional and small business capital gains tax concession limits.

It’s important that SME owners, 38 percent of who state they’ll need over $100,000 annually retirement, make the most of their superannuation options.

The limit of $500,000 in after-tax contributions proposed within Federal Budget 2016-17 means some people won’t be able to contribute as much to their superannuation as they might like.

Before the federal budget, the standard cap on non-concessional or after-tax super contributions was $180,000, although it was possible to bring forward up to three years’ worth of contributions to a total of $540,000. Some individuals may also be able to receive a double tax deduction for contributions to their SMSF during the month of June if they adopt what’s called a ‘reserving strategy’.

To download a copy of RSM’s full thinkBIG 2016 report, head to

For further information around any of these strategies, please contact Michael O’Hehir,
Principal at RSM Australia, on michael.o’[email protected] or call 02 6217 0316