When you make an Off Market Transfer to an SMSF, it can be treated in one of two ways when it is received by the SMSF. It can be treated as either a Contribution or alternatively as an Asset Purchase by the SMSF. It is totally your choice which option is chosen! Each is discussed below.
Treating the Transfer as a Contribution?
In the documentation to action the asset transfer you will need to list the Purchaser of the asset as your SMSF. At the end of the Financial Year we will forward to you a Checklist detailing if you wish the transfer to be treated as a Contribution or an asset sale. If you elect the transfer to be treated as a Contribution you will need to elect which Member will be allocated the contribution and the type of the contribution to be allocated, namely Non Concessional or Concessional. Once this election has been made, the value of the asset (not the asset itself) will be allocated to the Member when preparing the annual compliance documents for the SMSF.
Treating the Transfer as an Asset Sale
As detailed above in the documentation to effect the asset transfer you will need to list the Purchaser of the asset as your SMSF. At the time of the transfer you can elect that the transfer be treated as a sale and the SMSF pays you the Market Value of the asset being transferred. In this case we will not record the asset transfer as a contribution. Under this scenario the value of the asset (not the asset itself) will be allocated on a proportional basis to each Member based on Members existing ownership of the SMSF at the time of the transfer, when preparing the annual compliance documents for the SMSF.