Capital Gains Tax consequences on transferring assets between SMSFs, or from one SMSF to another super fund, are complex and require careful consideration to achieve the most effective tax outcome.
Exemptions on transfers between SMSFs may be available where there is a relationship breakdown.
As such, CGT will apply on the transfer unless an exemption applies. Generally speaking, the amount of the capital gain is based on the market value of the asset transferred less the original purchase price of the asset and certain incidental costs.
The amount of the capital gain calculated will be taxed in the SMSF at a rate of 15%. However, if the SMSF held the asset for a period of at least 12 months, then any capital gain is discounted and taxed at an effective rate of 10%.
Any capital losses on the transfer can be used to offset future capital gains, but only in the current SMSF and importantly, not the super fund to which the assets are transferred. In many circumstances, this means neither fund can make use of capital losses.