SMSFs – top 10 action points before 30 June

Time is running out to ensure everything is in place before year end!

Here are 10 key issues SMSF trustees and members should consider before 30 June:

  1. Contributions caps – concessional

Review your YTD contributions from all sources. If you wish to top up to your personal cap ($30k if aged under 49 at 30 June 15 or $35k if aged 49 or more at 30 June 2015) then contributions must be made by 30 June. Beware of late transfers that might not be technically processed until 1 July 2016.

  1. Contribution caps – non-concessional

The rules have become more complex and caution should be exercised. The current legislated non-concessional cap is $180k pa or $540k under the three year bring-forward rule if aged under 65. However, as from budget night, a $500k per person lifetime limit is proposed for non-concessional contributions made since 1 July 2007. If legislated, this will have significant ongoing ramifications. You should carefully consider the impact before making any further non-concessional contributions (either cash or deemed).

  1. Minimum pension payments

For members in pension phase you must ensure the minimum pension is paid by 30 June to avoid potential adverse tax outcomes. Again, avoid late transfers.

  1. Maximum pension payments

For members with a TRIS, review all withdrawals to date against the permitted maximum pension for the year of 10% of the account opening balance (usually 1 July 2015).

  1. Related party transactions

All transactions with related parties for the year should be reviewed to ensure they are on an arms-length basis and not in breach of SIS. In particular, related party rental arrangements should be on a commercial basis – rental charged at current market rate and all payments up to date.

  1. In-house asset review

Fund investments should be reviewed on an ongoing basis to determine which are in-house assets and the likely in-house asset market value ratio (maximum 5%). If the fund had an excess in-house asset position as at 30 June 2015 then remedial action to dispose of excess in-house assets is required before 30 June 2016.

  1. Collectibles – end of transitional rules

By 30 June 2016 funds with collectibles or personal use assets acquired prior to 1 July 2011 must comply with the new rules including not stored at personal residence, insured separately in name of SMSF, and any sale to a related party must be supported by independent valuation from a qualified valuer.

  1. Prior year personal deduction notices

For those with members still dealing with 2015 personal tax issues, the deadline for lodgement of the required notice with the fund is the date of lodgement of their tax return or 30 June 2016, whichever is the later.

  1. Prior year contribution splitting notices

Likewise, 2015 contribution splitting notices must be lodged with the fund by 30 June 2016.

  1. Valuation of assets at market value

This is a continual hot topic. If you have just cash, listed or public offer type investments then generally a straightforward exercise. If you have property, unlisted investments, collectibles, exotics etc. then now is the time to arrange the necessary valuations. In some cases the market value will impact the matters outlined above.

Don’t delay – after 30 June it is likely too late to address most of the actions noted above.

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