As the 2015-2016 financial year draws to a close, there are a few very important tasks self-managed super funds (SMSFs) members and trustees need to take care of.

  1. Make your contributions on time
  2. Review your investment strategy
  3. Check you comply with in-house asset rules
  4. Preparing to start a pension
  5. Make sure you have drawn the minimum pension in 2016.

Make your contributions on time

If you want your contributions to be counted this financial year, they must be in your SMSF’s bank account by 30 June 2016. This year concessional contributions (tax deductible) including personal deductible and employer contributions, are capped at $30,000 (or $35,000 if you will be age 49 or over on 30 June). However, proposals were announced in this year’s Federal Budget to reduce the concessional cap to $25,000 for everyone from 1 July 2017, so now might be a good time to use the higher caps while they are still available.

A lifetime non-concessional contribution limit of $500,000 was also announced in this year’s Federal Budget. The limit is proposed to apply from Budget night (3 May 2016) and will take into account contributions dating back to 1 July 2007.

Before making any non-concessional contributions (after tax) you may need to contact the ATO or us to obtain a record of your contributions going back to 2007.

Review your investment strategy

The ATO expects SMSF to review their investment strategy and insurance requirements each year. Take a look at your fund’s position and whether it’s still on track to meet your objectives.

It’s also a good time to review each member’s insurance needs in relation to life, disability and income protection insurance.

Value assets and check your in-house asset level

All SMSFs assets need to be valued at market value each year, so if you have any physical or unlisted assets (such as commercial property or shares/units in unlisted companies and trusts) you will need to value those assets.

Depending on the type of assets, you may be able to value them yourself, however, you will need to keep records and be able to explain and justify how you came up with the value. Alternatively, if the asset is difficult to value or hasn’t been independently valued for some time, you may wish to consider getting a professional valuation before 30 June 2016.

Where your fund holds in-house assets, such an investment in a company or trust that you or your relatives control, the value of that asset must not exceed 5% of the fund’s total market value as at 30 June 2016. Where the level of the fund’s in-house assets is over 5%, the ATO can direct you to sell some or all of them. You might be able to avoid this by topping up your contributions to increase the overall fund value before 30 June 2016, but it’s a good idea to get some advice from us first.

Preparing to start a pension?

To maximise your tax concessions in the first year of your pension, make sure it’s ready to go from 1 July 2016 as you can’t set it up retrospectively.

Make sure you have drawn the minimum pension in 2016

If you are already paying a pension from your SMSF, it must meet the minimum drawdown requirements to be tax effective. This depends on your age and the percentage value of your pension account, and this can catch people out. If the ATO believes you haven’t satisfied the pension requirements, your pension will cease from the start of the year and your earnings won’t be exempt from tax.

Having the right advice on hand can really help you at this time of the year. If your SMSF breaches any of the ATO’s requirements, you could also be liable for Trustee penalties and additional tax payments – and also risk a potential loss on your investments.

If you need any help with the above checklist, or have any questions, please contact us.

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David Watkins, has been providing advice to clients since 1987. He is a Certified Financial Planner, a member of the Financial Planning Association (FPA), and Superannuation Professionals Association of Australia (SPAA).Google Plus

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