General / Jun 28, 2016

SMSF year end review tips

Brent Jones
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The end of the financial year is a good time to review your, and your clients SMSF arrangements to ensure everything is set up for success in the coming year. Below are a few areas you may wish to consider as part of that reviiew

Review Transition to Retirement Arrangements

Ensure that the minimum pension amount is paid from your SMSF by June 30 to receive the tax exemption. Ensure you do not exceed the maximum limit. If you are accessing a pension under “Transition to Retirement” ground, The government proposes, from July 1 to remove the tax exempt status of assets supporting a transition to retirement pension.

Review Collectables for new rules

Collectables and personal use assets are things like artwork, jewellery, vehicles, boats and wine. Investments in such items must be made for genuine retirement purposes only.

Collectables and personal use assets can’t be:

  • leased to, or part of a lease arrangement with, a related party;
  • used by a related party; or
  • stored or displayed in a private residence of a related party.

In addition:

  • your investment must comply with all other relevant investment restrictions, including the sole purpose test;
  • the decision on where the item is stored must be documented (for example, in the minutes of a meeting of trustees) and the written record kept;
  • the item must be insured in the fund’s name within seven days of the fund acquiring it; and
  • if the item is transferred to a related party, this must be at market price as determined by a qualified, independent valuer.

Grandfathering clauses for funds with collectables and personal assets held prior to July 1, 2011, will expire on June 30, 2016.

Market valuations of unlisted assets to be determined

Trustees are required to ensure the assets held in their fund are valued at market value. This should be detailed in the financial statements and based on objective and supportable data. This is particularly important for funds that hold real estate. SMSF Engine can provide an online residential valuation to satisfy the ATO requirements for $99

Maximise concessions Contributions

The concessional cap will be lowered to $25,000 for everyone from July 1, 2017, so this may be the last chance to contribute more under the existing rules

Members over 49 have a $35,000 cap on concessional contributions. In all other cases, the cap is slightly lower at $30,000. It may be possible for members to contribute some more before the end of the financial year.

Lifetime Caps

The budget introduced a lifetime cap of $500,000 on non-concessional (or after tax) contributions. This cap includes any after tax contributions made since July 2007. It’s important to understand how members are placed against this new cap to ensure they don’t inadvertently exceed it.

Review Investment Strategies

SMSF trustees are required to review their investment strategy on a regular basis. A good practice is to do this at the end of financial year.

Questions you should ask your clients:

  • Are they happy with the current investments in the SMSF?
  • Is the return sufficient to achieve your retirement goals,
  • Have circumstances changed such that a more aggressive or conservative approach to risk is required
  • Is your insurance sufficient to supplement your super in the event of your death or incapacity

Review your clients Deeds

You should always have your trust deed reviewed on a regular basis to ensure it remains current with existing super law. A common mistake for trustees is to implement strategy such as an income stream only to find out later that their deed doesn’t allow it or has limitations. Your clients need the flexibility to be able to select any retirement strategy they require – not to be prevented simply because the deed is out of date. You can contact NTAA Corporate (,au) to have your deeds updated to include the most recent changes

Related Party Loans to SMSF

The ATO recently released guidance on the minimum expectations they have for related party loans to ensure any existing loans are on arm’s length terms. Failure to do so could result in income from the LRBA being assessed as non-arm’s length income

Previously, the ATO required SMSF trustees to review all of their related party loan arrangements for LRBAs to ensure they were on arm’s length terms by 30 June 2016.

However, the ATO has extended the deadline to 31 January 2017 to give trustees more time to comply with the new guidelines.


Review your current SMSF Arrangements

Managing SMSF clients is not easy. The rules can be complex and can change dramatically.

The end of financial year is a good time to review your business to determine the type of support you need to stay on top of the compliance and regulatory issues and ensure that you have the support you need for the money you pay.

If you currently do everything in house, are your staff proficient in the software and do they have sufficient experience and expertise?

If you use external administrators, are you getting value for money in regard to fees, turnaround times and quality. Are you being kept up to date with the latest issues that may impact your funds?

An experienced and qualified support network should give you comfort that your SMSF business is empowered to grow and be profitable.

SMSF Engine have been assisting NTAA members for over 4 years and can provide all or any of the services require to successfully manage your SMSF business


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