Multi-million dollar SMSFs becoming harder to build
SMSFs with asset values exceeding $10 million are becoming less common and less likely to be built, according to one industry lawyer.
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?”