1. Sue, where did you grow up?
I have always been a Sydney girl and I grew up on the Northern Beaches.
2. What study have you completed?
I hold a Bachelor of Commerce degree from the University of NSW and I qualified as a Chartered Accountant by completing the Institute’s ‘professional year’.
3. What is your role at BridgePoint Group and what do you specialise in?
As Director of BridgePoint Group Accounting, I am responsible for leading the accounting and tax team. I specialise accounting and taxation and have a passion for helping our small and medium clients with business advisory services.
4. What key trends have you noticed in recent times?
People are still not trusting of the superannuation system and so self-managed funds continue to be popular. And an increasingly important area of interest to my clients is succession planning.
5. Share a piece of wisdom with us?
In my view, succession planning should be about the future growth of the business not simply about the past and your retirement. That makes a win-win situation possible for all. An important piece of business advice that was once given to me was that it was never too early to plan for business succession! I couldn’t have said it better myself.
See below for Sue’s Tips for Success
Australians love property and they often mistrust superannuation! So when the ATO made it clear that our self-managed super funds could borrow money to buy property, it was a match made in heaven. And it seems it is a good idea and a super strategy (pardon the pun), some of the time.
But my tip is – look before you leap! It’s not always a path paved in gold.
In this article, I want to offer you an honest insight into both sides of the opportunity.
Pros
- Property has traditionally been viewed by experts as a “safe” and “long-term” investment, both appropriate attributes for super fund assets.
- There are restrictions on how much money you can contribute to your super fund but by adding a rental property, the fund can grow more quickly with rental income.
- The super fund enjoys a lower rate of tax than any other structure in Australia right now. Your fund’s income and gains can even become tax-free once you are in pension phase.
Cons
- Where borrowed money is used, it involves setting up an ‘instalment warrant’ arrangement that can cost a few thousand dollars in legal and establishment fees.
- If the fund buys your business premises and is reliant on the rental income to make repayments, you need to make sure that the business has strong enough cash flows that it can afford the rent. Otherwise, you could lose the business and your super money.
- If you are approaching retirement age, having a big part of your fund tied up in an “illiquid” asset can pose problems when you want to start a pension.
- There are restrictions on how the property can be used and tripping yourself up can result in your fund becoming non-compliant. The penalties for non-compliance can be severe.
- It is easy for your overall investment portfolio to become lopsided toward property investments. That might be good if property is performing well but maybe not so good if it’s not. Most experts suggest a balanced portfolio.
So the verdict is ‘yes’ to property in super but don’t rush in – take the time to think it through and take advice on what is appropriate for you in all of your individual circumstances.
Sue Liebert is a Chartered Accountant and a Director of BridgePoint Group Accounting. BridgePoint Group Accounting are experts in structuring for property transactions. Contact sue@bridgepointgroup.com.au or call 1300 656 141.