Can I Donate Shares Directly from My SMSF?

Short answer: Generally, no.

If you hold shares inside a Self-Managed Super Fund (SMSF), you may be wondering whether those shares can be donated directly to charity. While it's a sensible question, the answer is not as straightforward as donating personally owned shares.

Why Can't an SMSF Usually Make a Donation?

An SMSF exists for one primary purpose: to provide retirement benefits for its members.

This is known as the sole purpose test, contained in Section 62 of the Superannuation Industry (Supervision) Act 1993 (SIS Act).

Because of this requirement, an SMSF generally cannot give away fund assets - including listed shares - to a charity, as doing so is unlikely to be consistent with the fund's sole purpose of providing retirement benefits.

Making a charitable donation directly from an SMSF could potentially create compliance issues for the fund.

So How Can Someone Donate Shares Held in an SMSF?

For many people, the process involves first accessing their superannuation benefits, provided they are legally entitled to do so.

This generally means:

1. The member satisfies a condition of release (for example, reaching retirement or another eligible condition).

2. The SMSF pays a benefit, either as a lump sum or a pension payment.

3. Once those benefits have been received personally, the individual can decide to donate cash or personally owned shares to an eligible charity.

At that point, the donation is made by the individual - not by the SMSF.

What If My Benefits Are Still Preserved?

If your superannuation benefits remain preserved, you generally cannot withdraw them simply to make a charitable donation.

Until an appropriate condition of release has been met, the assets generally need to remain within the superannuation environment.

Can I Donate Shares After They're Transferred Out?

Potentially, yes.

Once shares have been legally transferred out of the SMSF as part of a valid benefit payment and become your personal asset, they may be eligible for donation just like any other personally owned ASX-listed shares.

The most appropriate approach will depend on your circumstances, including how the benefit is paid and any taxation consequences.

Before You Donate

If you're considering making a charitable gift using assets connected with your SMSF, it's worth discussing your plans with your:

- SMSF accountant

- Financial adviser

- Tax adviser

- SMSF administrator

They can help ensure things are structured correctly.

The information in this article is general in nature and is not legal, taxation, financial or superannuation advice. Rules relating to Self-Managed Super Funds are complex and depend on individual circumstances. Before taking any action, you should seek advice from a suitably qualified financial adviser, accountant or legal professional.

General Information Disclaimer

This article contains general information only and does not constitute financial, legal or tax advice. Requirements vary between holdings, brokers, registries and personal circumstances. Consider obtaining advice from an appropriately qualified professional.