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Blog | Self managed super fund EOFY checklist

It's that time of the year when you need to run your eye over your finances to ensure all is in order before the end of the financial year on 30 June. No more so than if you have a self-managed superannuation fund (SMSF). There is a lot to consider and it can seem overwhelming, this has prompted me to compile a comprehensive checklist to help steer you on the right path.

Timing of Contributions and Pension payments 

  • If you are contributing to your super fund, it must be in the fund’s bank account by the close of business on 30 June 2020 (a Tuesday in 2020). 
  • Pension payments must leave the bank account by 30 June 2020, and if paid by cheque the cheque must be presented within a few days of the end of the financial year. 

Concessional Contribution limits 

  • The maximum concessional contribution limit is $25,000 this year.  The limit includes your employer’s superannuation guarantee contributions as well as your own salary sacrifice contributions, or personally tax-deductible contributions. 
  • From 1 July 2020, the government is increasing the age limit to enable those up to 67 to make contributions to super without meeting a “work test”.  Note that this legislation is still due to pass parliament later this month. 

Using the “carry forward” Concessional Contribution rules 

  • If your total superannuation balance at the start of the financial year is less than $500,000, then you can carry forward any unused concessional contribution cap from previous years and make a larger contribution in the current year. 
  • This rule started on 1 July 2018, so the maximum contribution for the current financial year would be $50,000 for someone who made no concessional contributions in the 2018/19 and 2019/20 financial years. 
  • You should use this strategy considering your future anticipated income and the expected future growth in your superannuation balance. 

Non-Concessional Contributions and new rules 

  • From 1 July 2020, individuals will be able to make contributions of their own after-tax money to superannuation up to the age of 67.  There is no requirement to work for 40 hours in a 30-day period (the work test) to make these contributions.  The ATO has guidance for SMSFs regarding contributions which you can read about HERE
  • While the legislation is yet to pass parliament (scheduled for 18th June sittings) those who are 64 and over should consider their contribution strategy with regards to using the bring-forward rule.  This rule allows you to make contributions more than the usual $100,000 non-concessional cap by bringing forward future year’s caps to the current year.  You should seek advice before implementing such strategies. 

Superannuation co-contributions 

  • You might be able to get the government to boost your super through co-contributions.  Access is based on your income and your personal superannuation contributions.  You can use the ATO calculator to find out if you are eligible. 

Spouse contributions 

  • If your spouse has taxable income of less than $37,000, then you could make a super contribution on their behalf and receive a tax offset of up to $540.  You can also find out more from the ATO regarding this rule HERE

Claiming a personal tax deduction for superannuation contributions 

  • If you plan to claim a personal tax deduction for contributions you made to your super fund, then you need to ensure you have a valid notice of intent to claim a deduction.  This is an ATO form (NAT 71121) and can be found HERE
  • Note that your fund must receive this notice prior to the start of a pension if you intend to start a new pension with the contributed amounts.   

Splitting contributions with your spouse 

  • You can split your contributions to your spouse each year.  This can be a handy way to even up your respective balances in super…especially if: 
  • You have one main income earner whose super balance is substantially higher 
  • There is an age difference between spouses that would allow starting of pensions earlier for the older spouse 
  • You can access concession cards or age pension by retaining funds in the younger spouse’s name. 

Moving assets into super – timing is everything 

  • While you can move personal shareholdings into your SMSF (as a contribution), you should act early.  The contract is only valid once the broker receives the fully valid standard transfer form, so timing once again is important. 

  Ensure you pay enough pension from your SMSF 

  • For those drawing funds from their SMSF as a pension, you need to ensure you have drawn at least the minimum required amount for the financial year.  Keep in mind the government have reduced the minimum required by 50% for the 2019/20 and 2020/21 financial years.  The table below summarises the minimum pension requirements for the 2019/20 and 2020/21 financial years : 

 

  • If you have already taken the minimum pension for the year, and you are over 65 and not working, then you cannot put the money back into the fund. 
  • There are also strategic planning options for those who still need to withdraw funds to meet living costs but have met their minimums. These payments could be treated as lump sum payments or taken from an accumulation account (if one exists).  You should seek advice from your adviser or accountant prior to acting. 

Is your superannuation pension reversionary? 

  • If your pension is reversionary to your spouse, it gives your spouse 12 months to get their financial affairs organised before having to decide around how to manage your death benefit. 
  • Reversionary pensions should also consider your wider estate planning requirements, especially for those with blended families or those with minor children.   
  • Reversionary pensions also have an important part to play in relation to the $1.6 million Transfer Balance Cap. 

Review your capital gain or loss position on your assets 

  • If you have realised any capital gains during the financial year, you should review your portfolio to see if there are assets where you have capital losses that could be realised to offset your capital gain. 

Market valuations for SMSF assets 

  • Regulations require SMSF assets to be valued at Market Value at the end of each financial year, including property and collectables.  For more information, refer to the ATO’s publication regarding this HERE.  

In-house assets and COVID-19 

  • If your SMSF has any in-house assets, then you need to ensure the value of those assets is always less than 5% of the total value of the assets of the SMSF.  The ATO has the power to levy administrative penalties on trustees for non-compliance. 
  • Due to COVID-19, the ATO will not act against SMSFs where: 
  • At 30 June 2020, the market value of an SMSF’s in-house assets is over 5% because of the downturn in the share market 
  • The trustee of the SMSF prepares a rectification plan 
  • By 30 June 2021, the rectification plan either cannot be effectively implemented because of market conditions or does not need to be implemented because the market recovers and the 5% test is again satisfied at 30 June 2021. 

Rent relief and COVID-19 

  • If you have provided rent relief to a tenant of a property owned by your SMSF, then ensure your decision has been documented in writing including the reasons for the decision and the details of the relief being provided. 
  • The ATO has provided a non-binding practical approach of not applying resources to this issue for the financial years ending 30 June 2020 and 30 June 2021.  However, while this announcement is positive, it should not be relied upon.  Auditors will want full documentation. 

Estate planning and loss of capacity 

  • If you have a Binding Death Benefit Nomination in place for your SMSF, then ensure it reflects your current wishes. 
  • You should also ensure you have in place an Enduring Power of Attorney to allow someone to step into your place as trustee of your SMSF illness or mental incapacity. 

While the above is not an exhaustive list it should ensure you and your SMSF make it through the end of the financial year in good shape.  

For clients of Hewison Private Wealth, your adviser is already performing these checks for your SMSF and if they have not yet been in contact, they will be soon. 

If you are unsure about your SMSF and would like a Hewison adviser to review your fund, please call us for a no-obligation discussion. The best way to get in touch is right HERE.

 

Hewison Private Wealth is a Melbourne based independent financial planning firm. Our financial advisers are highly qualified wealth managers and specialise in self managed super funds (SMSF), financial planning, retirement planning advice and investment portfolio management. If you would like to speak to a financial adviser on how you can secure your financial future please contact us 03 8548 4800, email info@hewison.com.au or visit www.hewison.com.au

Please note: The advice provided above is general information only and individuals should seek specialised advice from a qualified financial advisor. The views in this blog are those of the individual and may not represent the general opinion of the firm. Please contact Hewison Private Wealth for more information.