There are quite a few experts on the Switzer program and the Sky Business Channel who advocate spending on infrastructure projects. There is also a huge sum of money being managed by superannuation funds (both nationally and internationally) – see for example here.
Would someone please explain to me what factors are inhibiting some / all of these projects, which the government can’t afford in its budget, from being performed by private investment, investment from superannuation funds or a combined government / private funding arrangement?
Further to this, would you please provide some advice on some of the best ways for an SMSF to invest in infrastructure projects.
A: Thanks for the question about the best ways for an SMSF to invest in infrastructure assets.
It is not easy to invest directly as most SMSFs would not qualify as a ‘wholesale investor’ and would be ineligible to receive any information memorandum. In any event, most projects just aren’t interested in small investors.
There are 2 ways to invest indirectly. Firstly, you can invest in the listed “infrastructure” companies on the ASX. These tend to be single industry focussed (eg. roads, power stations or airports etc), and often have a single or a small number of assets. The listed companies that can be classified as “infrastructure” include:
APA Group; Asciano Group; Australian Infrastructure Fund; DUET Group; Envestra Limited; Infigen Energy; Macquarie Atlas Roads; MAP Group; Qube Holdings Limited; Redbank Energy Limited; SP AusNet; Spark Infrastructure Group; Sydney Airports and Transurban Group
Secondly, many of the major fund managers (AMP, Macquarie, Colonial First State, Magellan etc) have unlisted infrastructure funds.
I hope this helps.
Does a subscription to the Switzer Report qualify as a tax deduction?
A: It should be deductible to the extent that the cost is incurred in gaining or producing assessable income of a super fund.
Here are some articles on tax deductions that may be of interest to you:
A: When you're retired, your investment earnings from your super fund are free of tax. Any capital gains made on your investments before you retire are also tax-free.
By the way, your franking credits from the shares you could hold on the dividends then become a refund from the tax office! If the company's tax rate is 30% but your tax rate is zero because you're retired, any tax the company pays on these related shares comes back to you as refund.
The income you want to take out of your fund is limited by the age-based minimum but once again when you are over 60, there's no tax. For money outside of super you will be slugged the normal tax rates.
By the way, if you pass 60, you don't have to go onto the pension. Some people do part-time work or go holidaying spending money outside of their super fund. Provided you're over 60, you can withdraw lump sums from super and they will come tax-free.
Your dividends from shares will be slugged at 15% but franking credits can more than wipe out this slug. As you can see, there are a number of rules and regulations you should get to know.
For money outside of super you should look at the after-tax contributions, which means you can slip outside super money into super without tax penalties but these are subject to age restrictions.
Know these well with respect to your age to avoid making a mistake that can attract an unwanted higher tax slug.