Replying to Avatar David Pinkerton

More from CGPT:

Q. So the lump sum withdrawal is tax-free and the ECPI is irrelevant in that case?

A. Yes, that's correct. If a member of an SMSF chooses to withdraw their benefits as a lump sum, any capital gains made by the SMSF on assets held within the fund will generally be tax-free. In this case, the ECPI rules would not apply, as the lump sum withdrawal is not considered to be an income stream payment.

It's worth noting that there are some circumstances where a lump sum withdrawal may be subject to tax, such as if the member has exceeded their transfer balance cap or if they have received certain types of contributions. However, in general, a lump sum withdrawal from an SMSF is typically tax-free for members who have reached their preservation age. It's always important to seek professional financial advice to understand your personal circumstances and any potential tax implications.
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David Pinkerton 2y ago

And s bit more from CGPT...

Q. Do advocates for this strategy emphasise the potential for a tax-free lump sum payment after preservation age?

A. Yes, advocates for the strategy of investing in assets for capital gain potential within an SMSF may emphasize the potential for a tax-free lump sum payment after preservation age. This is because, as we discussed earlier, any capital gains made by an SMSF on assets held within the fund are generally tax-free if the member chooses to withdraw their benefits as a lump sum after reaching their preservation age.

For SMSF investors who are focused on long-term growth and capital appreciation, the potential for tax-free capital gains at retirement can be an attractive feature of this investment strategy. By investing in assets with the potential to appreciate in value over time, SMSF investors can build up the value of their superannuation fund and potentially realize tax-free capital gains when they retire and start to draw down their benefits.

However, it's important to note that investing solely for tax purposes may not be the best investment strategy. It's important to consider other factors such as investment diversification, liquidity, and potential risks when choosing investment strategies for an SMSF. It's always recommended to seek professional financial advice before making any investment decisions.

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