When the global financial crisis savaged retirement savings in 2008, many self-managed super funds escaped the devastation better than other super funds.
What’s behind this better performance?
With 30 June hitting on Monday, there are a plethora of things that you as a trustee of your SMSF should consider to squeeze the maximum possible benefit from your SMSF. Here are just 15 things to consider before the year is up:
1. Valuation of your SMSF’s assets
It is a requirement under the superannuation law that the assets in your SMSF be valued each financial year. This is so that we can record the market value of the assets in the SMSF’s 2013/14 financial statements for income tax purposes and our SMSF auditor can verify that you have not contravened various provisions of the income tax and superannuation laws. The superannuation law does not require that you use a qualified independent valuer, as long as the valuation that you have arrived at is based on objective and supportive data. The ATO has published two documents on its website – “Valuation guidelines for SMSFs” and “
The ATO has introduced new penalty powers which it can impose on you if your fund breaks certain superannuation rules.
The new rules apply from 1 July 2014 and allow the ATO to fine you and require you to rectify the mistake that has been made. They can also direct you to take further education on self-managed superannuation funds if they are not satisfied you understand your role as trustee of your self-managed fund.
There are three types of new penalties that can be imposed:
- A direction to undertake, at your expense, an education course to improve your knowledge of self-managed superannuation funds,
- Rectify any breaches of the superannuation rules that your fund has not complied with, and
- An administrative penalty for breaching the superannuation rules (see below).
The fines range from $850 for minor administrative matters through to $10,200 for more serious matters such as breaches of the rules about the fund’s investments.
Estate Planning is a crucial component to the management of your superannuation assets. In light of this, attention to Binding Death Benefit Nominations (BDBNs) should surpass ‘just filling in a form’.
In just over four weeks will be in a new financial year. Understanding what you could do before and after 30 June 2014 can provide the icing on the cake for employees, investors and those in small business. Such things as bringing forward tax deductions or delaying the receipt of income within the rules can mean less tax this year. When it comes to superannuation, make sure you maximise the tax deduction this year or salary sacrifice the right amount so you get the best possible outcome and don’t end up with tax penalties.
2014 Budget Summary
Superfund Partners Director and wordsmith Mark Beveridge has distilled the government spin doctoring down into a few pages of need to know information. It doesn’t cover every dollar saved or spent, but it will help answer your most common questions.
There has been a flurry ATO activity recently – with the latest target being the release of details of a private binding ruling around the provision of nil interest loan to an SMSF by a related party.
Since 2007 SMSFs have been allowed to borrow to purchase assets using instalment warrant or limited recourse borrowing arrangements. There is no restriction on who the lender can be with these arrangements – so it is possible for a related party (including members of the SMSF) to lend money to their own SMSF, however the private ruling issued by the ATO recently is an extreme case.