Is it a good time to put your shares in super?

Published 17-JUN-2016 12:10 P.M.

|

3 minute read

Hey! Looks like you have stumbled on the section of our website where we have archived articles from our old business model.

In 2019 the original founding team returned to run Next Investors, we changed our business model to only write about stocks we carefully research and are invested in for the long term.

The below articles were written under our previous business model. We have kept these articles online here for your reference.

Our new mission is to build a high performing ASX micro cap investment portfolio and share our research, analysis and investment strategy with our readers.


Click Here to View Latest Articles

Investors have ridden the highs and lows of trading in the last 12 months, more so than usual.

The Australian All Ordinaries is down 5.1, finance sector stocks are down around 7.2% and metals, mining sector stocks are down on average 19.2% for the year and let’s not forget oil stock investors, who are scratching their heads over whether to buy back in, or stay right out.

As we know, there are stocks that defy the trend, potential future gold producer Blackham (ASX:BLK) has had an excellent run, along with oil explorer 88 Energy (ASX:88E) and graphite explorer Volt Resources (ASX:VRC); graphite is a star mineral at the moment, with requirements growing as the so-called energy revolution takes hold.

The past performance of these stocks is not and should not be taken as an indication of future performance.

According to Andrew Zibik, senior financial planner at Omniwealth, the general downturn may present a smart opportunity for investors nearing retirement in the next five years.

Zibik says it is possible to contribute your shares in what is called an ‘in-specie’ contribution to your superannuation fund.

An in-specie contribution takes the cash out of the super equation.

“The benefits of this strategy is that you can continue to hold your shares and move the ownership of that holding into the superannuation environment which has a lower tax rate compared to many investors marginal tax rate,” Zibik says.

“If the shares are being transferred at a price lower than what you paid for them there will be no capital gains tax payable.”

Zibik says that regardless of who wins the election on 2 July, most superannuants will still be able to draw an account based pension from the superannuation fund tax free.

There are several things to consider with in-specie contributions.

Zibik lists 5:

1) Making an in specie transfer of shares from your own name to your superannuation fund is a capital gains event. This means that if you are transferring the shares at a higher value than what you purchased them you may need to pay capital gains tax. If you are transferring the shares at a loss it means you will retain that loss on your tax return which can be used to offset future capital gains. Given some shares are trading at five year lows, it may be an opportune time to contribute these shares to your superannuation fund to allow future gains to be made in a concessional tax environment that is superannuation.

2) You must choose a date that the transfer is to take place, properly report the true value of the share on that day as your sale/purchase price and the share registry must be notified of this transfer within 28 days.

3) Transferring shares into superannuation will most likely count towards your non-concessional contribution cap which is currently $180,000 for this financial year or $500,000 if you bring forward three years of contributions. Given the recent changes announced in the budget, one cannot make more than $500,000 in non-concessional contributions dating back from 1 July 2007.

4) Ultimately, one would only use this strategy if they anticipate to continue holding these shares for the long-term.

5) Most members of a self-managed superannuation fund will be able to use this strategy. Some retail superannuation funds will accept shares as an in specie contribution. Unfortunately, most industry funds are not able to receive in specie contributions of shares yet but several are investigating this as an option in the future.



General Information Only

S3 Consortium Pty Ltd (S3, ‘we’, ‘us’, ‘our’) (CAR No. 433913) is a corporate authorised representative of LeMessurier Securities Pty Ltd (AFSL No. 296877). The information contained in this article is general information and is for informational purposes only. Any advice is general advice only. Any advice contained in this article does not constitute personal advice and S3 has not taken into consideration your personal objectives, financial situation or needs. Please seek your own independent professional advice before making any financial investment decision. Those persons acting upon information contained in this article do so entirely at their own risk.

Conflicts of Interest Notice

S3 and its associated entities may hold investments in companies featured in its articles, including through being paid in the securities of the companies we provide commentary on. We disclose the securities held in relation to a particular company that we provide commentary on. Refer to our Disclosure Policy for information on our self-imposed trading blackouts, hold conditions and de-risking (sell conditions) which seek to mitigate against any potential conflicts of interest.

Publication Notice and Disclaimer

The information contained in this article is current as at the publication date. At the time of publishing, the information contained in this article is based on sources which are available in the public domain that we consider to be reliable, and our own analysis of those sources. The views of the author may not reflect the views of the AFSL holder. Any decision by you to purchase securities in the companies featured in this article should be done so after you have sought your own independent professional advice regarding this information and made your own inquiries as to the validity of any information in this article.

Any forward-looking statements contained in this article are not guarantees or predictions of future performance, and involve known and unknown risks, uncertainties and other factors, many of which are beyond our control, and which may cause actual results or performance of companies featured to differ materially from those expressed in the statements contained in this article. S3 cannot and does not give any assurance that the results or performance expressed or implied by any forward-looking statements contained in this article will actually occur and readers are cautioned not to put undue reliance on forward-looking statements.

This article may include references to our past investing performance. Past performance is not a reliable indicator of our future investing performance.

 

Discover Small Cap
Biotech Stocks

Join thousands of other Investors following our stock commentary for Free

X