The end of the financial year is the perfect time to give your SMSF some love. The following are our top 10 pre-30 June items we believe every SMSF trustee should look at.
Take your minimum pension!
If you are taking a pension from your SMSF, you need to make sure you’ve taken the minimum required amount before 30 June to enjoy all that juicy tax free income and refunds of franking credits!
We should have already informed of what your minimum withdrawal is, but please give us a call if you need to double-check it.
If you’ve made contributions during the year, you may save tax by converting those amounts into pension ‘mode’ (it doesn’t happen automatically!). Be aware though, if you have more of your SMSF in pension mode, the minimum amount will increase as well, so we will need to re-calculate your minimum pensions.
For tax-deductible (concessional) contributions, the upper limit is $30,000 if you are under 50 years old, and $35,000 if you are over 50. As per our blog article last month (SMSF changes in 2016 Budget) it’s proposed these caps will reduce to a flat $25,000 from 1 July 2017 – so make the most of the higher limits while they are still around.
With personal (non-concessional) contributions, we have a proposed lifetime cap of $500,000 which is retrospective from 1 July 2007. For many people this means no more non-concessional contributions.
We acknowledge the above changes are not legislated – a lot could happen post 2nd of July. Although we are erring on the side of caution and treating the $500,000 lifetime cap as if it will be put in place, we will not stand in the way of any of our clients who want to contribute based on the rules as they stand today ($180,000 per year with a 2 year bring-forward).
Although the ATO has pushed this deadline for small business (19 or less employees) out to 28 October 2016, now is a good time to be checking to ensure your payroll system is Superstream compliant (if you’re a business owner) or to notify your employer of your Superstream ESA (electronic service address) – which is “SMSFDATAFLOW” for all Superfund Partners clients.
The ATO has provided a lot of content for business owner on Superstream, including this step-by-step guide.
Review your SMSF investments
The end of the financial year is a good time to review your portfolio including any capital gains you’ve made. If your investment review reveals some holdings you believe you are better NOT having in your SMSF portfolio, maybe now is a good time to crystalise those losses. This may also offset any realised gains you’ve made and have the added benefit of reducing your SMSFs tax bill (although we strongly advise against wash-sales purely to save tax).
Superfund Partners clients can access their investment portfolios online via our website here.
Also on investments, are your SMSF investments still in alignment with your investment strategy? Now is the perfect time to review, and if necessary adjust your strategy or your holdings.
Pay any outstanding taxes or fees
The new financial year is a great time to start fresh. If you have any outstanding tax bills, it’s always best to pay these before 30 June.
Likewise, if you have any other outstanding bills – including to your friendly SMSF accountants – now is the time to pay them and claim the tax deduction before 30 June.
As a guide SMSF property investments need to be re-valued every 3 years. Superfund Partners can help out with residential property valuations, but it’s up to you when it comes to commercial properties. Contact us if you need clarification on exactly what you need to do.
Where your SMSF leases commercial premises from a business you own, you need to ensure all rent is paid and up to date in alignment with the lease agreement.
Every property should have a professional depreciation schedule done. Contact us if you want to be put in touch with a cost-effective provider.
Related limited recourse loans (LRBAs)
This is a big one! If you’ve leant money to your SMSF under a limited-recourse borrowing arrangement, you need to ensure all interest and principal payments have been made prior to 30 June 2016 and you have a plan in place to comply with the safe-harbour rules by January 2017.
Play by the new rules that come into place on the 1st of July 2016 or get them out of your SMSF. More on these rules and what you must do in our previous blog article here.
Valuations for EVERYTHING
Not just for property, any unlisted investment needs to have a market valuation for 30 June. If you need assistance on how to value unlisted or unusual assets, including what evidence you’re going to need to keep the SMSF auditors happy, please contact us.
Update your SMSF trust deed
Your trust deed is the rule book of your SMSF and it needs to change to keep pace with changes to laws and new strategies that benefit you.
If your trust deed is more than 5 years old, we would seriously suggest an update to ensure your SMSF continues to remain compliant with all relevant laws and regulations.
Is it time for a SMSF trustee company?
The end of the financial year is the perfect time to make the switch to using a special purpose trustee company for your SMSF.
Find out more about the benefits here: Why corporate trustees are better
And learn more about the process here: Changing your SMSF trustee from individuals to a special purpose company