Transfer of Farm Land to
Self-Managed Super Fund (SMSF)

Can farm land be transferred from the farm business into an SMSF?

Yes. Farm land can be either sold to an SMSF or transferred as an in-specie contribution.

If using in-specie contributions, care must be taken not to breach the contribution caps (when combined with all other contributions for the year). These are called:

Concessional Contributions

• $27,500

Non-concessional Contributions

• Age < 65 - non-concessional cap of $100,000 per annum, with ability to bring forward two years of entitlements to make a non-concessional contribution of up to $300,000 at once for a 3 years period.
• Age 65-74 - Non-concessional cap of $100,000 per annum.
• Age 75+ - Nil. Super fund cannot accept personal contributions.

Total Superannuation Balance

• You can only make non-concessional contributions if your total superannuation balance is less than $1.7 million.

Contributions arising from the small business CGT concessions are excluded from being non-concessional contributions and are limited to the member's CGT cap.

• CGT cap currently $1,650,000 (2022/23 Financial Year).
• Contributions covered by CGT cap are:
• CGT exempt amount (up to $500,000) under the retirement exemption.
• Capital proceeds from the disposal of active assets that qualify for the 15 year exemption (even if asset was pre-CGT).

These contributions can be made even where the total superannuation balance exceeds $1.7 million.

Where the land is acquired from a related party, it is exempt from section 66 of SISA, as it is considered to be business real property, and is therefore allowed.

• Transfer must be at arm's length (i.e. market value) under section 109 of SISR.
• If there is a private dwelling on the property, it must not exceed 2 hectares.

Can SMSF lease land to related farm business?

In general, SMSF trustees cannot lend, invest in, or lease to a related party of the fund more than 5% of the fund's total assets. Such an investment is considered to be an "in-house asset".

An exemption to this rule is where real property is leased to a related party and the property is considered to be "business real property" of the fund. A market-value lease must be paid by the related party.

How can Brentnalls Agribusiness help?

At Brentnalls Agribusiness, we have knowledge and experience to help you plan and execute our succession plan.