As we approach the end of financial year SMSF holders should use this time for some important housekeeping. Below are 13 things you need to do to maximise the benefits of having a self managed super fund.
1) Get a market value of your assets
SMSFs are required to undertake annual valuations of all their assets for their financial statements and annual audit. See the ATO publication ‘Valuation guidelines for SMSFs’ for more detail.
2) Minimising capital gains tax
If you have made considerable gains this financial year it might be worth taking some losses to offset the gains to minimise tax on capital gains (10% for super funds).
3) Maximise contributions
Your concessional contribution limit, if you’re under the age of 50 during the financial year, is $30,000 or $35,000 if you are 50 years or older. The non-concessional (after tax) contribution limit is $180,000. If you are under 65 you can bring forward up to two years’ worth of non-concessional contributions, which means you can make $540,000 in one year. Make sure your contributions are received on or before June 30.
4) Ensure your employer contributions have been received
Ensure that your Superannuation Guarantee contributions for the June 2015 quarter have been received and that you have accounted for these in your concessional contribution gap.
5) Ensure your salary sacrifice contributions have been received
Salary sacrifice contributions are treated as concessional contributions. Make sure any salary sacrifice contributions have been received by your employer as per your salary sacrifice agreement before contributing additional concessional contributions.
6) Consider contribution splitting in your SMSF
If your partner hasn’t reached their preservation age or is under 65 and has not retired from the workforce you can choose to split up to 85% of your concessional contributions between you and your spouse. You cannot split non-concessional contributions. Splits must be made in the financial year immediately after the one in which your contribution was made. So you can split contributions made in the 2013/14 financial year in the 2014/15 tax return.
7) Have you just turned 65 or are about to?
If you are under 65 at any time during the 2014/15 year you can access the ‘bring it forward’ rule. So if you have just turned 65 in FY 2014/15 this is your last chance to contribute three times your non-concessional cap in one year.
8) Does your spouse earn less than $13,800?
If so you may be eligible for a full or partial tax offset for spouse contributions up to $3000. The maximum offset available is 18% ($3000 x 18% =$540) but decreases if your partner’s income exceeds $10,800.
9) Can you access the government co-contribution of $500?
If you have a low-income spouse or partner who is engaged in employment, or an adult child who is working part time, you are most likely eligible to access the government co-contribution.
The maximum co-contribution is $500, which is paid when a taxpayer earns less than $34,488 and makes a personal super contribution of $1000. If the tax payer earns between $34,488 and $49,488 the maximum co-contribution is reduced by 3.333 cents for every $1 in excess.
Other conditions to access the co-contribution include that at least 10% of the tax payer’s income must come from employment related activities or carrying on a business (i.e. self-employed), the taxpayer must be under 71 years of age at the end of the financial year and that the person making the super contribution has not claimed it as an income tax deduction.
10) Make sure you have taken the minimum pension payment
If you are taking an account-based pension (including a transition to retirement pension) you need to ensure that your SMSF has paid the minimum pension amount by June 30 in order to receive the tax exemption. If you are accessing a pension under a ‘Transition to Retirement” income stream also make sure you do not exceed the maximum limit.
11) Get on Top of SMSF Administration and Audit
Your SMSF financial statements and audit need to be complete to lodge your tax return. Make sure that you get your records and information ready to send to your accountant. At MGI we will provide you with a list of what information is required by what date.
12) Take advantage of tax deductions
An SMSF is able to claim tax deductions for a number of expenses including:
- Actuarial costs
- Accountancy fees
- Audit fees
- Updating a trust deed to comply with the SIS Act
- Ongoing (not initial) investment adviser fees
- Subscriptions to reports
- Other administrative costs incurred in managing the fund
- Member life insurance premiums (conditions apply)
- Tax agent fees
- Interests on loans borrowed to acquire an asset under a Limited Recourse Borrowing arrangement.
- Investment property deductions related to a SMSF
13) Get cracking
While it’s tempting to leave sorting out your SMSF until the last minute it’s best to get started early to make sure that any contributions are received well before the deadline for this tax year (otherwise you risk having the contributions treated as received in the following tax year). Contributions are only recognised when they are received by the superannuation fund’s bank account so make sure you allow plenty of time.
If you have any questions getting your SMSF ready for June 30 speak to your MGI tax adviser today on 3002 4800.
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