Here is a Quick-Plan Guide of essential things to plan ahead for the year with your SMSF:
1. Employment Super Contributions (Concessional) in the SMSF bank account
If you want to claim super contributions in this tax year, organise via your payroll regularly and remember they need to be as cleared funds by 30 June!
2. Contribution Caps – don’t go over
The concessional contribution (tax deductible / employer) caps vary some years for ALL individuals, regardless of age (earlier years were higher). Take care – if you have more than one super fund as well as your SMSF, ALL concessional contributions made to ALL your funds are added together and are counted towards the cap. MORE HERE
3. Minimum Pension taken
If there are members in the pension phase, plan the year ahead (weekly/monthly) to ensure they will be paid the required minimum pension amount by 30 June. Failure can result in the investment income derived from your assets supporting that pension no longer being exempt from tax and other penalties could apply. MORE HERE
4. Claim Tax Deductions for Personal Contributions
If you plan to claim a tax deduction for your superannuation contributions, make sure you are eligible to claim the tax deduction – seek advice if you’re unsure. An error in over-contributing or claiming a tax deduction for personal superannuation contributions could have excess tax consequences.
5. Off-Market Transfers
You are still eligible to conduct in specie contributions of shares to your fund. Listed stock held in your personal name can be transferred to your fund as non-concessional or concessional contributions (if eligible) to your SMSF. Consideration should be given to capital gains tax, contribution caps and the off market transfer procedures.
6. Non-Concessional Contributions – and Caps
Top up your super with your savings with after-tax money – seek advice if you’re unsure. Be also careful not to go over the Cap for personal superannuation contributions could have excess-tax consequences.
7. Non-Concessional Contributions – bring Forward rule
If you are under the age of 65, you can bring forward up to two years’ worth of Non-concessional contributions, in one year, representing your non-concessional (after-tax) cap over a three-year period. See Here
8. Government Co-Contribution
Remember to take advantage of the Government co-contribution by making a Non-concessional (after tax) super contribution before the end of the financial year. For every dollar of eligible contributions, the Government contributes 50 cents to your superannuation up to a maximum government co-contribution of $500. See Co-Contribution
9. Transfer Asset – In-Specie Contribution
Some assets can be transferred into super “In-Specie” – such as business real property from your name or a related entity such as your business or company (residential is not allowed for this transfer. Shares in your name may also apply – seek advice!
10. Investment Strategy is followed
Review your investment strategy and ensure all investments are made in accordance with it, and the SMSF trust deed. Also, make sure your investment strategy has been updated to include consideration of insurances for members.
11. New Investments – don’t fall foul of the rules
SMSF allows a wide range of investments – property, shares, units in managed funds, collectables – but there are some limitations – you can’t invest in related party assets (a relation to you or entity you control) or your own company for example. Seek advice to be sure, BEFORE you sign anything!
12. Valuation of Investments – keep records
Ensure the assets in your fund have a current value – keep good records of purchase price and sale prices! If you hold unlisted investments such as property or unit trusts, make sure you have documented a process of valuing the assets. It is best to have an independent valuation where possible. See the ATO’s “Valuation guidelines for SMSF’s” for further information.
13. Insurance Policies
Since 1 July 2014, new rules came into effect that will prohibit superannuation fund trustees from providing an “insured benefit” in relation to a member unless the insured event is entirely consistent with a superannuation condition of release. This means that Trauma policies and own occupation Total and Permanent Disability (TPD) policies will not be permitted. However, it is important to note these new rules will not apply to policies taken out prior to 1 July 2014.
14. 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. Always take care as new SMSF penalty powers will make it easier for the ATO to apply administrative penalties (fines) for smaller misdemeanors ranging from $820 to $10,200 per breach, per trustee!
15. Estate Planning
Plan for the unexpected – what will happen should a member prematurely die. Ask yourself how will the fund continue? What death benefit nominations are in place? Are the investments able to be quickly cashed? If the fund has life insurance policies, are they appropriate for the member’s needs, and are the policies correctly set up in the fund?
16. Boost your partner’s super
If your partner earns under $40,000, you may want to plan to contribute some of your after-tax (savings) up to $3000 to their super fund. You in return get a $540 tax offset against your tax.
17. Selling a small business – reduce Capital Gains by contributing some to super
If you are selling your small business (subject to current limits and criteria) seek advice whether there is a chance some of the proceeds could be contributed to your super – it may save some Capital gains tax with the small business capital gain concessions.
SuperBenefit works with SMSF trustees to CONNECT them with the advisors they need.
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