One Page SMSF End of Financial Year Checklist 2013


Ok last day to get your SMSF fund in order and ensure we are making the most of the strategies available to us. Here is a one page checklist of the most important issues that you should address with your advisors well before the year-end. For more detail on each issue visit the full article on The SMSF Coach – EOFY 2013 Strategies

1. It’s all about timing! Forget about doing anything for your fund after the Thursday June 27th
2. Review  Your Concessional Contributions – 25K , 25K, 25K max
3. Review your Non-Concessional Contributions
4. Co-Contribution
5. Spouse Contribution
6. Over 65? Do you meet the work test? (The 40 hours in any 30 days rule)
7. Check any payments you may have made on behalf of the fund.
8. Notice Of Intent To Claim A Deduction
9. Contributions Splitting
10. Off Market Share Transfers (selling shares from your own name to your fund)
11. Pension Payments
12. Reversionary Pension is often preferred option to pass funds to spouse or dependent child.
13. Review Capital Gains Tax Position of each investment
14. Review and Update the Investment Strategy not forgetting to include Insurance of Members
15. Collate and Document records of all asset movements and decisions
16. June Contributions Deductible this year but can be allocated across 2 years.
17. Market Valuations of all assets now required
18. In-House Assets – keep below the 5% limit at all times
19. TPD Insurance (Total Permanent Disability – basically “never work again” insurance)
20. Do you need to update to a Corporate Trustee
21. Check the ownership details of all SMSF Investments
22. Review Estate Planning and Loss of Mental Capacity Strategies.

As always please contact me if you want to look at your own options as we are currently taking on new clients. We have offices in Castle Hill and Windsor but can meet clients anywhere in Sydney or online via Skype.

Liam Shorte B.Bus SSA™ AdvDipFS

Financial Planner & SMSF Specialist Advisor™

nextgen firm-logo[1]

 Follow SMSFCoach on Twitter  Liam Shorte on Linkedin  NextGen Wealth on Facebook  SMSFCoach Blog

Tel: 02 8853 6833,  Mobile: 0413 936 299

liam@nextgenwealth.com.au

PO Box 6002 BHBC, Baulkham Hills NSW 2153

 Liam Shorte is a partner in NextGen Wealth Solutions, Corporate Authorised Representative of Genesys Wealth Advisers Limited, Licence No 232686, Genesys Wealth Advisers Limited ABN 20 060 778 216 • AFSL No.232686

Important information :

The information in this article is provided for illustrative purposes only and does not take into consideration your personal circumstances. You are encouraged to seek financial advice suitable to your circumstances to avoid a decision that is not appropriate. Any reference to your actual circumstances is coincidental. Genesys and its representatives receive fees and brokerage from the provision of financial advice or placement of financial products.

SMSF End of Financial Year Checklist 2013


OK so here we are already in the last quarter and with only 3 months to the end of the financial year to get our fund in order and ensure we are making the most of the strategies available SMSF 2013 Checklistto us. Here is a check-list of the most important issues that you should address with your advisers well before the year-end.

1.       It’s all about timing!

First thing to note is that June 30th falls on a Sunday this year so forget about doing anything for your fund after the 27th as funds transferred from Friday the 28th are unlikely to hit an account before the 1st July.

2.       Review  Your Concessional Contributions – 25K!, yes only 25K,  yes 25K max

Maximise contributions up to concessional contribution cap but do not exceed the 25 K Concession Limits that applies to everyone who is eligible to contribute this year.  Excess contributions tax is nasty and should always be avoided. So check employer contributions on normal pay and bonuses, salary sacrifice and premiums for insurance in super as they may all be included in the limit.

3.        Review your Non-Concessional Contributions

Have you considered making non-concessional contributions to move investments in to super and out of your personal, company or trust name.  May you have proceeds from and inheritance or sale of a property sitting in cash. As shares and cash have increased in value you may find that personal tax provisions are increasing and moving some assets to super may help control your tax bill.  Are you nearing 65, then consider your contribution timing strategy to take advantage of the “bring forward” provisions before turning age 65 to contribute up to $450,000.

4.       Co-Contribution

Check your eligibility for the co-contribution and if you are eligible take advantage.  Note that the rules have changed and are very different from previous years. To calculate the super co-contribution you could be eligible to receive based on your income and personal super contributions, use the Super co-contribution calculator.

5.       Spouse Contribution

If your spouse has assessable income plus reportable fringe benefits totalling less than $10,800 then consider making a spouse contribution. Check out the ATO guidance here

6.       Over 65? Do you meet the work test? (The 40 hours in any 30 days rule)

You should review your ability to make contributions as if you If you have reached age 65 you must pass the work test of 40 hours in any 30 day period, in order to continue to make contributions to super. Check out ATO Age Related contribution guidance

7.       Check any payments you may have made on behalf of the fund.

It is important that you check for amounts that may form a superannuation contribution in accordance with TR 2010/1 (ask your advisor), such as expenses paid for on behalf of the fund, debt forgiveness or in-specie contributions, insurance premiums for cover via super paid from outside the fund.

8.       Notice Of Intent To Claim A Deduction

If you are planning on claiming a tax deduction for personal concessional contributions you must have a valid ‘notice of intent to claim a tax deduction’.  If you intend to start a pension this notice must be made before you commence the pension.

9.        Contributions Splitting

Consider splitting contributions with your spouse, especially if your family has one main income earner with a substantially higher balance. This is a simple no cost strategy I recommend everyone look at especially with the Government moving on taxing higher balance accounts. See my blog about this strategy here.

10.   Off Market Share Transfers (selling shares from your own name to your fund)

The proposed ban on Off-Market transfer of shares into a SMSF has been dropped. YEAH!  If you want to move any shareholdings into super you should still act early. Here is the Standard Form for Computershare and here is the Link Market Services Form

11.   Pension Payments

If you are in pension phase, ensure the minimum pension has been taken.  For transition to retirement pensions, ensure you have not taken more than 10% of your opening account balance this financial year.

The minimum payment amounts have been by 25% for the 2012-13 years. The following table shows the minimum percentage factor (indicative only) for each age group.

Age Minimum % withdrawal 2012-13 year for certain pensions and annuities Minimum % withdrawal (in all other cases)
Under 65 3% 4%
65-74 3.75% 5%
75-79 4.5% 6%
80-84 5.25% 7%
85-89 6.75% 9%
90-94 8.25% 11%
95 or more 10.5% 14%

Sacrificial Lamb

Think about having a sacrificial lamb, a second lower value pension that can sacrificed if minimum not taken. In this way if you pay only a small amount less than the minimum you only have to lose the smaller pensions concession rather than the concession on your full balance. When combined with the ATO relief discussed in the following article “What-happens-if-i-don’t-take-the-minimum-pension”  you will have a buffer for mistakes.

12.    Reversionary Pension is often the preferred option to pass funds to a spouse or dependent child.

You should Review your pension documentation and check if you have nominated a reversionary pension.  If not, consider your family situation and options to have a reversionary pension. This is especially important with blended families and children from previous marriages that may contest your current spouse’s rights to your assets. Also consider reversionary pensions for dependent disabled children

13.   Review Capital Gains Tax Position of each investment

Review any capital gains made during the year and over the term you have held the asset and consider disposing of investments with unrealised losses to offset the gains made. If in pension phase then consider triggering some capital gains regularly to avoid building up an unrealised gain that may be at risk to government changes in legislation like those proposed this year.

14.   Review and Update the Investment Strategy not forgetting to include Insurance of Members

Review your investment strategy and ensure all investments have been made in accordance with it, and the funds deed.  Also, make sure your investment strategy has been updated to include consideration of insurances for members. See my article of this subject here. Don’t know what to do..call us.

15.    Collate and Document records of all asset movements and decisions

Ensure all the funds activities have been appropriately documented with minutes, and that all copies of all statements and schedules are on file for your accountant/administrator and auditor.

16.   June Contributions Deductible this year but can be allocated across 2 years.

For those who may have a large taxable income this year and are expecting a lower taxable next year you should consider a contribution allocation strategy to maximise deductions for the current financial year. This strategy is also known as a “Contributions Reserving” strategy but the ATO are not fans of Reserves so best to avoid that wording!

17.   Market Valuations

Regulations now require assets to be valued at market value each year, ensure that you have re-valued assets such as property and collectables. Here is a good article by Liz Westover of the Institute of Chartered Accountants on the subject.

18.   In-House Assets

If your fund has any investments in in-house assets you must make sure that at all times the market value of these investments is less than 5% of the value of the fund. Do not take this rule lightly as the new penalty regime will make it easier for the ATO to apply fines for smaller misdemeanours.

19.   TPD Insurance (Total Permanent Disability – basically “never work again” insurance)

Have you reviewed your insurances inside and outside of super? Check your TPD policies owned by the fund for own occupation definition as the rules about deductibility for these policies have changed. Here is a link to a good article about this subject from Money Management

  • 20.   Do you need to update to a Corporate Trustee  

We recommend a corporate trustee to all clients.  To understand why please read this article on Why SMSFs should have a Corporate Trustee

21.   Check the ownership details of all SMSF Investments

Make sure the assets of the fund are held in the name of the trustees on behalf of the fund and that means all of them. Check carefully any online accounts you may have set up without checking the exact ownership details.  You have to ensure all SMSF assets are kept separate from your other assets.

22. Review Estate Planning and Loss of Mental Capacity Strategies.

Review any Binding Death Benefit Nominations (BDN) to ensure they are valid and still in accordance with your wishes.  Also ensure you have appropriate Enduring Power of Attorney’s (EPOA) in place allow someone to step in to your place as Trustee in the event of mental incapacity or death. Do you know what your Deed says on the subject?

23. Review any SMSF Loans

Have you made all the payments on your internal or third-party loans, have you looked at options on prepaying interest or fixing the rates while low. Have you made sure all payments in regards to Limited Recourse Borrowing Arrangements (LRBA) for the year were made through the SMSF Trustee. If you bought a property using borrowing , has the Holding Trust been stamped by your state’s Office of State Revenue.

Don’t leave it until June, review your Self Managed Super Fund now and seek advice if in doubt about any matter.

As always please contact me if you want to look at your own options as we are currently taking on new clients. We have offices in Castle Hill and Windsor but can meet clients anywhere in Sydney or online via Skype.

Liam Shorte B.Bus SSA™ AdvDipFS

Financial Planner & SMSF Specialist Advisor™

Verante Financial Planning

 Follow SMSFCoach on Twitter  Liam Shorte on Linkedin  NextGen Wealth on Facebook  

Tel: 02 8853 6833,  Mobile: 0413 936 299

liam@verante.com.au

PO Box 6002 BHBC, Baulkham Hills NSW 2153

 Liam Shorte is a partner in Verante Pty Ltd, Corporate Authorised Representative of Genesys Wealth Advisers Limited, Licence No 232686, Genesys Wealth Advisers Limited ABN 20 060 778 216 • AFSL No.232686

Important information :

The information in this article is provided for illustrative purposes only and does not take into consideration your personal circumstances. You are encouraged to seek financial advice suitable to your circumstances to avoid a decision that is not appropriate. Any reference to your actual circumstances is coincidental. Genesys and its representatives receive fees and brokerage from the provision of financial advice or placement of financial products.

What information do I need to provide for my SMSF Audit


At the end of each financial year your Self-Managed Super Fund will need to be audited by an independent third-party SMSF auditor. 

Having your SMSF audited isn’t exactly exciting, but it is an essential part of the compliance process. Looking to save money on the audit by going for a cheap service may come back to bite so I always recommend paying a decent fee to an experienced auditor is worthwhile. If they are not doing at least 25 audits a year then don’t use them as experience is crucial and it is necessary to have knowledge of what to look for and how to guide you the ultimate client.

The SMSF audit involves a review of your fund and the strategies and transactions during the year to ensure it remains a ‘complying fund’ in line with the ATO’s definition.

Who can audit my SMSF?

Your SMSF can only be audited by an approved SMSF auditor.  SMSF auditors are most commonly qualified accountants; however there are some additional requirements.

Members of the following organisations are qualified SMSF auditors:

  • SMSF Specialist Auditors, accredited by the SMSF Professionals’ Association of Australia (My personal preference)
  • CPA Australia
  • The Institute of Chartered Accountants Australia
  • National Institute of Accountants
  • Association of Taxation and Management Accountants
  • Fellows of the National Tax and Accountants Association Ltd

SMSF Specialist Auditors, as appointed by the SMSF Professionals’ Association of Australia, are also qualified to complete this important SMSF function.

SMSF Audit Check-list

The person performing the SMSF audit will require a number of documents and may seek these from your Administrator, accountant or directly from you the Trustees.  The auditor will generally have a standard SMSF audit check-list, however the following will give you some guidance on what you are generally asked to provide:

  • Financial statements of the fund.
  • Cash Management and Bank statements for all fund accounts including Cheque, Savings and Term Deposits.
  • Managed fund /Wrap annual transaction and income report.
  • Share Broker’s statement showing all transactions.
  • Holding statements for all shares held during the year and the end of year balance.
  • Buy & sell contracts for all shares held during the year including Off Market Transfers and any corporate actions.
  • Statements showing clearly the ownership of all fixed interest securities like bonds, hybrids and notes.
  • Contracts for any property purchased or sold
  • Copy of the Title deed showing evidence of ownership for any property in the correct name.
  • Property valuations and updated if starting a new pension.
  • Building & Liability insurance certificates of currency
  • Lease agreements and rental income statements
  • Documentation for any art or collectables including evidence of Insurance in the name of the SMSF.
  • Details of any debts owed by the SMSF including loan statements showing repayments
  • Documentation of any related party loans or investments
  • Confirmation of any contributions or withdrawals
  • Confirmation that the member is eligible for contributions or meets a condition of release for withdrawals
  • Pension or lump sum benefits payment details including copies of Pension Agreements and minutes.
  • Information on any  other investments not mentioned.
  • Completed SMSF Investment Strategy in writing including consideration of members’ insurance needs.

This is not an exhaustive list and your SMSF auditor may require additional documentation.

For further information on the issues raised in this blog please contact our Castle Hill SMSF Centre or Windsor Financial Planning Office. While we are not auditors we can point you in the right direction of people you can trust.

I hope this guidance  has been helpful and please take the time to comment. Feedback always appreciated. Please reblog, retweet, put on your Facebook page if you found information helpful.

Liam Shorte B.Bus SSA™ AdvDipFS AMC

Financial Planner & SMSF Specialist Advisor™

 Follow SMSFCoach on Twitter  Liam Shorte on Linkedin  NextGen Wealth on Facebook   

Verante Financial Planning

Tel: 02 8853 6833,  Mobile: 0413 936 299

PO Box 6002 BHBC, Baulkham Hills NSW 2153

5/15 Terminus St, Castle Hill NSW 2154

308 George St, Windsor NSW 2756

 

ABN 20 060 778 216 • AFSL No.232686

Liam Shorte is a partner in VERANTE, Corporate Authorised Representative of Genesys Wealth Advisers Limited, Licence No 232686, Genesys Wealth Advisers Limited ABN 20 060 778 216.

Important information :

The information in this article is provided for illustrative purposes only and does not take into consideration your personal circumstances. You are encouraged to seek financial advice suitable to your circumstances to avoid a decision that is not appropriate. Any reference to your actual circumstances is coincidental. Genesys and its representatives receive fees and brokerage from the provision of financial advice or placement of financial products.

Is your SMSF lending money to someone?


Is that loan in your SMSF’s best interest?

The Tax Office issued an information sheet on their website last November warning trustees about the perils of lending an SMSF’s funds to the wrong person. This includes your own business, someone who advises you or a family member or friend.

An all too common occurrence is the practice adopted by some people of withdrawing funds from their SMSF to “temporarily” help keep their business afloat when cash flow is tight.

Has your SMSF loaned money? If so, you need to make sure the loan terms comply with the law and are in the best interests of your funds sole purpose test which is to provide for your retirement.

The boys and girls at the ATO are rightly concerned some trustees are lending money from their fund to people who provide advice or assist in the running of the fund. This may not be in the best interest of your SMSF, and may place your retirement savings at risk. If someone is recommending you set up a SMSF and then to lend them or a related party money for a development, you have to ask yourself in who’s best interest are they working? Might be time to scrutinise the minute details of this “too good to be true one time only opportunity”.

So when would a loan agreement not be seen to be in the best interest of your SMSF ? Basically, when you have given discount loan rates or favourable terms – this could have serious consequences. Here is one example they give:

 when you have given discount loan rates or favourable terms – this could have serious consequences. In addition to putting your member’s benefits at risk, your SMSF could be found to be non-complying and would, therefore, not qualify for concessional tax rates.

They advise that before lending any money, you should consider your fund’s investment strategy and determine whether the investment is appropriate and, in particular, whether lending money to people providing you with services or advice is in the best long-term interests of your SMSF.

If you are not sure about making these types of investments choices, they recommend that you seek advice before entering into such arrangements.

If you still decide to go ahead and lend money from your SMSF, the ATO advise that “you should:

  • write an appropriate loan agreement and have it signed by all the parties involved
  • ensure the loan agreement specifies all the terms of the loan, such as:
    • what the security for the loan
    • what is the repayment period
    • when repayments will be paid
    • the amount of the repayments
    • the interest rate
  • ensure the interest and repayments are received by the fund according to the loan agreement
  • take appropriate action to protect the fund’s investment if the loan agreement is not followed
  • ensure the loan is sensible and does not put the members’ benefits at risk
  • ensure that the conditions of the loan agreement do not provide the borrower with favourable terms.

Remember that you are the one ultimately responsible for running your SMSF, and you must make sure you understand your duties, responsibilities and obligations.”

With regards to taking funds out to help your business, you need to firstly know that should the business go under that your Superannuation is in most cases protected in bankruptcy from creditors so you should be careful about accessing this protected asset.

Regardless of how much you trust a person even if they are your accountant, lawyer, financial planner, mortgage broker or best mate, you need to get independent third-party advice. Don’t be embarrassed about not completely trusting the promoters scheme as it is often too late later to get your funds back and hindsight is a cruel tormentor when facing loved ones having lost your retirement nest egg.

For further information on the issues raised in this blog please contact our Castle Hill SMSF Centre or Windsor Financial Planning Office.

I hope this guidance  has been helpful and please take the time to comment. Feedback always appreciated. Please reblog, retweet, put on your Facebook page if you found information helpful.

Liam Shorte B.Bus SSA™ AFP

Financial Planner & SMSF Specialist Advisor™

SMSF Specialist Adviser 

 Follow SMSFCoach on Twitter Liam Shorte on Linkedin NextGen Wealth on Facebook   

Verante Financial Planning

Tel: 02 98941844, Mobile: 0413 936 299

PO Box 6002 BHBC, Baulkham Hills NSW 2153

5/15 Terminus St. Castle Hill NSW 2154

Corporate Authorised Representative of Magnitude Group Pty Ltd ABN 54 086 266 202, AFSL 221557

This information has been prepared without taking account of your objectives, financial situation or needs. Because of this you should, before acting on this information, consider its appropriateness, having regard to your objectives, financial situation and needs. This website provides an overview or summary only and it should not be considered a comprehensive statement on any matter or relied upon as such.

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