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With the end of the financial year very close, there are several things you should assist your SMSF clients with to get their SMSF in order and perhaps avoid any unintended compliance issues. We have put together a quick checklist to help you out.

Investment Strategy

Due to recent court cases and the ATO’s focus on the importance of investment strategies, it is essential that this document is reviewed and if necessary updated to avoid audit issues. Based on feedback from the ATO, the auditor is expecting to see a strategy that is tailored and specific to the fund, rather than a repeat of the legislation. They expect that the strategy will outline how the fund investments meet each member’s retirement objectives and goals and that it includes a detailed discussion of the selected investment assets that considers risk, return, liquidity, and diversification.

You can read more about the ATO’s current view here – https://www.ato.gov.au/super/self-managed-super-funds/investing/your-investment-strategy/#WhatneedstobeincludedinmySMSFsinvestment

Contributions

When reviewing contributions, it is important that you have all the information. The concessional contribution caps can be different for each member as some members may have access to carry forward contribution caps.  The carry forward amount, however, is dependent on their Total Super Balance (TSB). This means all balances and not just the SMSF. Check that the member’s super is linked to their MyGov account so you can see what the ATO have recorded as their TSB. Also check all records with your client to make sure that this balance is correct, particularly in relation to accounts held outside the SMSF.

Other aspects of contributions to consider:

  • If the member is over 67 years of age, have they met the work test?
  • Have contributions been received in the super fund’s bank account by 30 June?
  • Have the members paid any super fund expenses on behalf of the fund such as accounting fees or property expenses?

Pension Payments

A reminder that the 50% minimum still applies for year ended 30 June 2021. This concession has also been extended for the 2022 financial year.  When reviewing pension payments, make sure that the minimum pension has been met or exceeded and received by the member on or before 30 June. Waiting until 30 June to make any required payments may be a costly mistake.

Market Valuations & In House Assets

Your clients are now required to value SMSF assets annually. Ensure that you have the Trustees getting up to date valuations as close to 30 June 2021 as they can for property and collectables. It may be worthwhile to chat with the fund’s Auditor to ensure that you understand what they will be looking to see to sign off the audit.

If the SMSF is carrying an In-house Asset you will need to review the estimated valuations of assets to see if there is any action required to keep the value of the in-house asset under the 5% limit as at 30 June. Be mindful that correcting a compliance breach relating to exceeding the 5% limit can be difficult and, in some circumstances, can only be fixed with the sale of the asset.

Documentation

End of financial year is a great time to review all the fund’s documentation. Particularly if you have taken on a new client during the year. Making sure that you have the complete chain of Trust Deeds, Pension commencement documentation and change of Trustees will not only help avoid any future complex outcomes but will make the Accounting and Audit process much more efficient.

At Keep It Simple Super we value working with our clients to ensure simple processes and simple outcomes. If you want to avoid complex and costly outcomes for your clients, speak to us today to get access to our award winning SMSF Administration service.