As part of recent legislation changes as part of the investment strategy trustees / members are required to consider the holding of life insurance on behalf of members within the fund.
There several advantages that may considered prior to undertaking this action.
- Even if you pay excess contributions tax, the benefits of the proceeds within super may still be worthwhile.
- Concessional contributions to the fund can be used to pay for deductible premium resulting in effectively no contributions tax.
- The life policy is owned by the SMSF on behalf of the member.
- Proceeds are substantially quarantined from the outgoing co owners debts and other legal liabilities.
- If paid to the SMSF, the proceeds of the life policy would then available in a “low tax” and ultimately a no tax environment.
- Premiums on the life policy can be funded through the superannuation guarantee charge ( that is, pre tax dollars).
REMEMBER, the above are issues that auditors focus on when it comes to the audit of a SMSF. Our audits for funds start from $300 and follow a comprehensive audit plan.
DISCLAIMER: The above is general advice only, you should not act on this advice without consulting a professional adviser to discuss your personal circumstances.