Bob is 62 years old and runs a successful hardware store from a building he bought in 1992 and has now fully paid off. Bob wants to retire and let his son James take over the business. But James can’t get a loan to buy the property because, at a value of $1M, like most people his age James doesn’t have enough deposit.

Bob, his wife and James have a Super Fund with total assets of $500K. In discussions with his Accountant Bob learns that his super fund can acquire the property using a super fund loan.

The family’s super fund invests in the property by taking out a $650K loan and the Super Fund uses its existing funds for the $350K deposit and other transaction costs. Bob and his wife receive $1M, which they use to top up their super and produce a retirement income stream.

No CGT is payable as the sale was exempt under the small business retirement provisions. Bob and his wife each get a tax deduction for up to $50K of the super contribution and can receive up to $85K p.a. tax-free income.

James’ business pays the same tax deductible rent as previously except now the $75K p.a. goes to the super fund. Bob doesn’t have to worry about selling the business or premises to an outsider and James doesn’t have to worry about being evicted or suffering ‘unfair’ rent increases.