Do you have a question about your self-managed super fund? You can scan through the list of already answered questions on our website, or enter your question below and one of our experts will get back to you as soon as possible.
Important information: This content has been prepared without taking account of the objectives, financial situation or needs of any particular individual. It does not constitute formal advice. For this reason, any individual should, before acting, consider the appropriateness of the information, having regard to the individual’s objectives, financial situation and needs and, if necessary, seek appropriate professional advice.
Peter, what do you mean by “dollar cost average down”?
Thanks
A: Hi John,
Thanks for the question.
Here is an example: you buy 1,000 BHP shares at $40 and the price falls to $30 and by buying another 1,000 at the lower price your average price for all shares is now $35. This is called dollar cost averaging.
I hope this helps.
Regards,
Peter Switzer
My daughter is in the process of selling the unit where she now lives to move to a bigger house.
I want to buy the property at market value outright from the pension fund of my SMSF which I jointly hold with my wife. It will form part of our portfolio in the SMSF and we will rent it through an agent at market value to a third party not related or known to us.
Am I doing this within the rules of the SMSF?
A: The super laws don’t allow you to acquire a residential property from the relative of a member. Unfortunately this means your transaction isn’t allowed.
There is a growing rage of interest rate securities available which the ASX divides into separate classes e.g. hybrid type securities, convertible note, floating interest etc.
Could you please explain these classes and the pro’s and cons of each?
Also, I understood AGB’s were to have been tradeable on the ASX in March but I cannot find any AGB’s listed. Could you please advise how an SMSF can buy AGB’s and whether you would recommend an AGB over say a Bank issued interest rate security?
Thanks.
A: Thanks for the question.
Perhaps if I start with AGBs (Australian Government Treasury Bonds). You can purchase these currently through the Reserve Bank of Australia. They have a facility available for parcels of up to $250,000 – see more here
The ASX will also shortly start quoting a market in Australian Government Treasury Bonds and Treasury Indexed Bonds. The timing seems to have moved out a little – sounds like possibly sometime in May.
Would I buy AGB for my SMSF over investing in a term deposit or a bank issued interest rate security? Generally no – the premium that you pay (ie lower interest rate you receive) for the lowest risk security and the most liquid security (ie the government treasury bond) is not worth it. That said, there may be circumstances when you would:
The ASX publishes a guide – ‘Understanding Interest Rate Securities’, which can be downloaded here. This sets out the essential features of each of the 3 categories – government bonds, corporate bonds and hybrid securities - this is a really good starting point.
Hi Paul
Is the Suncorp notes open to general public and how can one access it?
A: Unfortunately, there is no general public offer. There is an offer for security holders (investors in Suncorp ordinary shares and SUN CPS2), and many brokers and financial planners will also have stock available under the “broker firm offer”.
If you are an existing security holder, you can pre-register now.
Is the $100,000 threshold per person and determined by the allocation of monies within the SMSF, or is the $100,000 threshold based on the total income?
A: It is worked out on an individual basis. The Fund's total income for the year is apportioned between the members, based on effectively their average balance.
If a member's income is > $100,000, then tax would be be payable on the amount in excess at 15%.
I hope this answers your question.
I reference your recent article Still a super slug – if ever legislated. Can you please explain further your comment that if you purchased assets prior to 1 July 2024 and if they are supporting a pension, they will remain free of capital gains tax. I thought the $100,000 threshold referred to all gains related to the sale of assets purchased after 5 April 2013, if when added to income breached the $100,000 threshold. Thanks
A: I think you may have misinterpreted what I wrote. To quote directly:
“Fortunately, this change is only being introduced prospectively and won’t apply to any existing asset for another 11 years – that is, until 1 July 2024. So, if you purchased the assets before 5 April, they can be sold at any time prior to 1 July 2024 and if they are supporting a pension, they will remain free of any capital gains tax.”
To confirm, an asset purchased prior to the date of announcement (5 April 2013) will remain capital gains tax free until 1 July 2024 under the 10 year “grandfathering” provision. If disposed of after this date, then potentially any capital gain from 1/7/2024 to the date of disposal will be taxable.
An asset purchased on or after 5 April 2013 will potentially be liable for capital gains tax on disposal.
Kind regards