Scenario:

• Peter (62 years old) operates a car workshop from a premises acquired in 1991. He wants to retire and allow his son John to take over the
• business.
• The property is now worth $1 million and has been fully paid off.
• Peter has few assets other than his interest in the business.
• Peter and his family have SMSFs with total assets of $500,000.
• The SMSF invests in the property using a Tandem Uehling brokered funder in order to provide $700,000 of the purchase price.

Facts:

• Their super fund provides the balance and the usual transaction costs including stamp duty.
• Peter receives the market value ($1m) which he uses to contribute to super.
• No CGT is payable because of the small business retirement provisions.
• Peter and his wife can each get a tax deduction for up to $105,113 for these contributions – the rest is non-deductible.
• Peter and his wife can now receive tax free income of $85,000 pa whilst John pays deductible rent of $73,000 pa.