Get your SMSF shipshape for EOFY

Get your SMSF shipshape for EOFY

If you have an SMSF, it’s essential to get your fund is in good shape and ready for June 30 and the annual audit.

It’s particularly important this year, because the ATO is focused on fixing a number of issues when it comes to SMSFs. These include high rates of non-lodgment and problematic related party loans by SMSF members operating small businesses.

So if you want to avoid ATO attention, here is a list of common tasks SMSFs need to check prior to financial year-end.

Check your paperwork is up-to-date

Review all the administrative responsibilities of your SMSF to identify any incomplete ones. These include updating the fund’s minutes to record all decisions and actions taken during the year, lodging any required Transfer Balance Account Reports (TBARs), and documenting decisions about benefit payments and withdrawals.

Make contributions and payments early

If you want a super contribution counted in the 2022–23 financial year, ensure the fund’s bank account receives payment by 30 June.

Minimum pension payments to members also need to be made by 30 June to meet the annual payment rules and ensure the income stream doesn’t cease for income tax purposes.

Ensure contribution administration is ready

If your SMSF receives tax-effective super contributions for salary sacrifice arrangements, ensure the fund has all the necessary paperwork before the arrangements commence.

Check you have appropriate evidence (and trust deed authority) to verify any downsizer contributions. From 1 January 2023, SMSF members aged 55 and over are eligible to make a downsizer contribution of up to $300,000 ($600,000 for a couple).

Lodge your annual return on time

Non-lodgment of the annual return is a major red flag for the ATO, particularly for new SMSFs.

Ensure your annual return is prepared and lodged on time to avoid coming under the tax man’s microscope for potential illegal early access or non-compliance.

Consider implications of new tax rules

The planned new tax on member balances over $3 million could create significant issues for some SMSF members, so trustees should review the potential implications ahead of EOFY.

Funds with large, lumpy assets such as business real property should consider the implications and liquidity issues of members implementing strategies designed to limit the impact of the new tax.

Value the fund’s assets

SMSF rules require all fund assets to be valued at market value at year-end, including investments in unlisted companies or trusts, cryptocurrency, and collectible assets. The ATO is monitoring this area, so trustees should organise appropriate valuations as soon as possible.

Ensure valuations can be substantiated if there are audit queries and the process is undertaken in line with valuation guidelines.

Reassess your investment strategy

Review the fund’s investment strategy to ensure it covers all relevant areas, including whether investment asset ranges remain relevant to your investment objectives. Deviations from strategic asset ranges must be documented, together with intended actions to address them.

Ensure all investments have been made in accordance with the investment strategy and the trust deed.

Review your NALE

Non-arm’s length expenses (NALE) and income are key interest areas for the ATO, so check the fund complies with the rules.

Pay particular attention to all SMSF transactions involving related parties and ensure their arm’s length nature can be fully substantiated.

Get your auditor onboard

Trustees are required to appoint their auditor at least 45 days before lodgment due date, so ensure you have this organised.

Prepare for earlier TBAR reporting

From 1 July 2023, SMSFs will be required to report TBARs more frequently. All TBAR events will need to be submitted 28 days after the quarter in which the event occurred, so ensure you have systems in place to meet the new requirement.

All TBAR events occurring in 2022-23 will need to be reported by 28 October 2023.

Ensure trustees have a director ID

SMSF with a corporate structure must ensure all trustees have a director ID number. Although this was a requirement from 1 November 2022, many SMSF trustees are yet to apply.

Holding a director ID is an essential part of the SMSF registration process and directors must apply via the Australian Business Registry Services website.

Ensure your contact details are updated

Although it’s easy to forget, SMSFs are required to keep all contact details, banking details and electronic service address up-to-date with the ATO.

If you would like to discuss EOFY tasks for your SMSF or your personal super contributions, call our office today.

2022-23 EOFY quick tips

Prior to 30 June remember to:

  • Check your fund software is updated to reflect the 1 July 2023 rise to 11% for the Super Guarantee (SG).
  • Consider making personal contributions into your super account to take advantage of the tax concessions in the super system.
  • Check all the fund’s investment are held in the name of the trustee.
  • Review the fund’s bank account for 2022-23 and ensure it has paid all SMSF-related expenses prior to year-end.
  • Double-check your SMSF hasn’t paid any amounts that could be deemed personal expenses. Correct these immediately if you find any such payments.
  • Ensure every trustee reviews their enduring power of attorney (EPOA) to check it remains appropriate. Trustees without an EPOA should arrange one immediately to avoid problems with incapacity and trustee decision-making.
  • Check trustees have reviewed and updated their estate plans and binding death nominations to reflect any changes to their personal circumstances.

As always, if you would like to discuss the contents of this newsletter please give us a call 07 5559 5760.

The information provided on and made available through this website does not constitute financial product advice. The information is of a general nature only and does not take into account your individual objectives, financial situation or needs. It should not be used, relied upon, or treated as a substitute for specific professional advice. We recommend that you obtain your own independent professional advice before making any decision in relation to your particular requirements or circumstances. Centaur Financial Services do not warrant the accuracy, completeness or currency of the information provided on and made available through this website. Past performance of any product discussed on this website is not indicative of future performance.

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