Special counsel at Townsends Business & Corporate Lawyers Michael Hallinan said that before July 2007, there were limits on the amount of benefits that could be taken on a concessionally taxed basis but no limit on the amount of undeducted contributions that could be made.
Currently, he added, there are limits on the amount of undeducted contributions that can be made and no limits on the amount of benefits that can be taken on a concessionally taxed basis.
“It is very difficult to contribute sufficient monies under the current system to create a [$10 million-plus] SMSF,” Mr Hallinan said.
“If an individual could contribute the maximum contribution each year for 40 years, the total contributed amount would be $8.2 million ($180,000 plus 85 per cent of $30,000). Obviously there would be earnings to add, but a real return of 2.55 per cent (3 per cent gross less 15 per cent tax), this may produce $14.5 million (present day dollars).
“Realistically, how many people at age 25 could contribute to super $205,500 each year for 40 years?”
Dear Special Counsel
This year some of my friends contributed $200,000 as concessional contributions to their DIY Super Fund for reasons you may not understand.
Please note that there are no penalties for breaching concessional cap amount, hence your statement unfortunately has been made with your limited understanding of personal situations for Very HNW individuals.
Individuals with personal passive incomes of $500,000 + can benefit with intentionally breaching the cap amount.
Almost all my friends SMSF’s will cross the $10M mark in 1 or 2 years – thanks to the Sydney property market and their contributions strategies.