A guide to in specie transfers

The Australian Tax Office (ATO) advises that funds or the trustees are not allowed to acquire assets from any parties related to the fund. However, the following assets are exceptions to the general rule and may be transferred in-specie:

• Listed securities, such as shares, bonds, or units listed on an approved stock exchange.
• Any asset that is specifically excluded from being an in-house asset, such as commercial property and investments in related non-geared trusts or companies.

The process of making an in-specie transfer to an SMSF may differ according to the asset being transferred. For instance, you’ll need to complete and lodge an off-market transfer form for in specie transfer of ASX-listed shares into an SMSF. 

This form can be procured from any financial institution. While filling out the form, remember to list the SMSF as the purchaser of the securities being transferred. You can also transfer managed funds in your name to an SMSF using an off-market transfer form.

If you wish to transfer commercial property, you’ll need an executed contract of sale to effect the transfer. The purchaser in the contract should be listed as the SMSF. It may be sensible to consult a solicitor to prepare the documents and lodge them with the appropriate state or territory revenue office.

It’s important to remember that in-specie transfer of assets are only allowed at market value, which should be clearly detailed in the off-market transfer form. If an asset is transferred to an SMSF at a price less than its market value, it will be deemed to have been transferred at market value.

Transferring an asset out of the SMSF typically occurs when you reach your preservation age or meet another condition of release, and the investment is being wound up. Such transfers must be made as a lump sum as pension payments are not allowed. An off-market transfer form or contract for the sale of commercial property showing the member as the purchaser is required to effect the transfer. 

If the asset is being transferred to another fund, the receiving fund must be listed as the purchaser on the off-market transfer form or the contract for the sale of commercial property.

There are some potential benefits of in specie contributions, such as saving money on buy and sell costs of assets, including capital gains tax (CGT) in instances where there’s no change in beneficial ownership. 

In specie transfer of shares could also free you from timing the market as you must stay invested until you retire and your investment is wound up. However, this also means that you can’t access an asset (be it shares or commercial property) that you transfer to your super until you reach your preservation age and meet a condition of release. Furthermore, contribution caps apply to non cash transfers and not following these caps could lead to tax penalties. 

It may be worth speaking to a solicitor or a financial expert to determine whether transferring your assets to your SMSF is a viable strategy for your situation. You’ll need to understand the process and how it will limit your access to the asset, as well as how you’ll be taxed, in order to make an informed decision.