Wealth Building - Business Premises Owned by your SMSF

Justin Enright • July 15, 2021

Wealth Creation - Business Premises Owned By Your Self Managed Superannuation Fund

We have observed an increase in many business owners utilising their self managed superannuation fund to acquire existing business premises they currently operate from or to acquire specific purpose property to move their business operations into. This strategy may or may not involve a borrowing known as a Limited Recourse Borrowing Arrangement (LRBA). This strategy has been utilised across different industries by clients.

The advantages can include but are not limited to:

Asset protection;
Being your own landlord;
Having another income stream (being rent) growing your superannuation balance;

Utilising this strategy requires a business to have strict commercial arrangements in place no different to that with an unrelated third party including but not limited to:

Commercial property valuation (if the business real property is being purchased by the SMSF from a related party);
Commercial lease between Landlord (SMSF) and tenant ;
Commercial rent paid by tenant to the landlord (SMSF) which is based on market value/valuation;

Rental income received by a SMSF is taxed inside the SMSF at only 15% of course. This compares to a highest marginal rate of 45% plus 2% medicare levy if a property is owned by an individual. Also if a property is sold by a SMSF in accumulation phase then generally any capital gain will be subject to a 10% tax rate if it has been owned for at least 12 months. For clarity a SMSF receives a one third general discount on capital gains. If a SMSF is in pension phase when a property is sold then the tax rate can be potentially nil.

Above all else the benefits of asset protection that arise from a SMSF owning business premises can be all pervasive. When owned by a SMSF and not by a trading entity then the asset is potentially protected from claims against a trading entity provided SMSF members (that may be Directors of the trading entity) have not met a condition of release.

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Michael Kennedy Retires from Morse Group

By Justin Enright • October 12, 2023

Michael Kennedy, FCPA Strategic Business Advisor at Morse Group based at our Norwest practice office has marked his last day as a professional accountant on 30 June 2023. Michael started his journey in professional accounting commencing work as a graduate accountant in 1976 at then Price Waterhouse after completing a Bachelor of Commerce with Honours at the University of NSW. After training as an auditor and completing what was then called the Professional Year Michael yearned to go back to the Country after originating off a farm from Tallimba near West Wyalong in the Central West of NSW. Shortly thereafter Michael took a role in Dubbo working for Frank Darcy in Dubbo with a large proportion of primary production clients from the Coonamble area and other parts of Western NSW. Just two years later Michael was Frank Darcy’s Partner and Darcy Kennedy came into being. In the ensuing 24 years Darcy Kennedy grew into an award winning team of more than 100 with 12 Partners. After Darcy Kennedy transitioned into Investor Group now known as Findex Michael moved back to Sydney. This saw Michael as a Partner in a firm at Norwest being Macquarie Partners for 4 years and then Deloitte as a Partner for a further 4 years. In 2016 Michael commenced at Morse Group and shortly thereafter the Norwest practice office of Morse Group was established by himself and Justin Enright. This was the Renaissance of the client facing advice facet of Michael’s career. The Norwest office has continued to be the fastest growing practice office in Morse Group since. Michael most recently focused on advising clients (especially family groups) across Morse Group on tax and business development strategies with emphasis on the tax aspects of superannuation and self managed superannuation funds. Value laden high quality client advice was the key driver throughout Michael’s career in professional accounting. “I leave the profession with no regrets after a wonderful journey …not bad for a boy from Tallimba…and now finishing with 7 wonderful years at Regional firm Morse Group which is 90 years old and thriving…led by Justin Enright who worked at Darcy Kennedy as a graduate in the early 90s and is modelling his firm on the values and client service we extolled in Dubbo “said Michael Kennedy. “There are extremely few people in the world who it can be said “do more for an organisation than what the organisation has done for them”. Michael Kennedy is one such person. He has multiple examples of the same stretching from the start of his regional career at Darcy Kennedy through to the finale at Morse Group. We at Morse Group are extremely proud of and thank Michael for all of his client service, counsel, guidance, mentoring and generosity. Testament to this is the outpouring of gratitude from a plethora of advisors who Michael has mentored over many years. We congratulate Michael on this extraordinary career and wish himself, wife Kaylene and extended family all the very best for a well earned retirement” said Justin Enright, Managing Partner of Morse Group.