As we count down to the end of another financial year, let’s have a refresh of some of the typical financial year end preparations and get up to speed with some newer requirements.
Personal Deductible Contributions
For your client to claim a superannuation contribution made in the 2022 financial year in their 2022 individual taxation return (being lodged in the 2023 financial year), they need to have signed and dated the s.290-170 form AND SMSF Trustee Acknowledgement BEFORE they lodge their return.
If you know the amounts being claimed, it makes sense to get the form and acknowledgement signed and dated now, well before your clients will be attending to their tax returns.
If your SMSF clients are splitting their contributions, your SMSF Administrator will need their completed Superannuation Contributions Splitting Application.
Providing this now means that the entries can be processed so you have access to real time contribution and member balance information.
Minimum Pension Payments
Missing minimum pension payments can be a costly mistake for your SMSF clients and leaving it until the last minute can be the thing that causes the issue. We’ve seen last minute bank withdrawal requests not be actioned by the bank in time and transfers not reaching accounts in time.
Remember, for an amount to be counted as a pension payment it must reach the pensioner’s bank account by 30 June so it is best to get the transfers completed well ahead of the financial year end.
Now is the time to get your plans in order for any new pensions you wish to put in place for your SMSF clients. The ATO are clear that a pension commencement cannot be retrospective so arranging documents ahead of your proposed start date is a must.
With the need to report most pensions for Transfer Balance Account purposes, having commencement start on 1 July can save you the possible additional cost of interim account preparation.
Documentation is key in distinguishing if a payment is a pension payment or a lump sum commutation. If you want your client’s payment recognised as a lump sum commutation then you need to document the election before the payment is made.
Annual elections are possible so arranging these with your SMSF Administrator now avoids payments being classified in way you did not intend.
Updating Investment Strategies
If your client’s investments have changed during the financial year, you may need to update their investment strategy. If your SMSF client has the lion’s share of their investments in a single asset class, the SMSF auditor will be looking to see that the investment strategy considers the risks associated with the lack of diversification.
Some investments are trickier for auditors to verify their existence and/or valuation. Helping your SMSF clients gather the information the auditor needs for these investments can save headaches for everyone involved and it certainly speeds up the audit turnaround time.
Investments needing dated screenshots or dated photos as audit evidence of existence can include: cryptocurrency, bullion, artwork, jewellery etc.
Lastly, if your clients haven’t already got their Director Identification Numbers, it’s time to direct them to abrs.gov.au/DirectorID. Every director needs the ID by 30 November 2022.
If you are looking to partner with an experienced SMSF specialist business to provide back office SMSF administration and technical support email [email protected] Don’t stick with just ok, partner with one of the best.