Highlights

  • The fund trust deed must be checked first, as some deeds require assets to be sold before benefits are paid out.
  • Members must have a condition of release for a lump sum before an in specie transfer can proceed.
  • In specie rollovers sit outside the SuperStream framework but the cash component of any rollover must use SuperStream.
  • CGT applies to the transfer at the market value of the asset on the date of transfer, regardless of the method used.

Transferring assets out of an SMSF in their current form, rather than first selling them and paying the cash proceeds, is called an in specie transfer. The process involves checking the deed, confirming the member has met a condition of release, and understanding how CGT, SuperStream, and receiving fund consent interact.

Deed Check and Condition of Release

The starting point is the trust deed. Some SMSF trust deeds require assets to be converted to cash before benefits can be paid, which would prevent an in specie transfer entirely without a deed amendment. Trustees must confirm the deed permits this method of payment before proceeding.

The member whose benefit is being transferred must have satisfied a condition of release for a lump sum benefit. Common conditions include reaching age 65, retiring after reaching preservation age, or satisfying another prescribed release condition. Without a valid condition of release, the transfer cannot occur.

SuperStream and Receiving Fund Consent

In specie rollovers fall outside the SuperStream electronic data standard because they involve the transfer of non-cash assets. The rollover documentation is agreed directly between the transferring SMSF and the receiving fund. However, if any cash forms part of the rollover, that cash component must be processed through SuperStream in the usual way.

The receiving fund must agree to accept the asset. Not all superannuation funds can or will accept in specie contributions or rollovers in non-cash form. This agreement should be confirmed and documented before the transfer proceeds.

CGT, Stamp Duty, and Market Value

CGT applies to the transfer as if the fund had sold the asset at market value on the transfer date. The fund must obtain and document the market value of each asset at the time of transfer. Stamp duty treatment varies by state and territory and depends on the nature of the asset being transferred; trustees should seek advice specific to their jurisdiction.