As the end of the financial year looms, now is a good time to review your Self-Managed Superannuation Fund (SMSF). Take the time now to ensure your fund is in great shape and 30 June ready.
• Valuation of investments: Ensure the assets in your fund have a current value. If you hold unlisted investments such as property or unit trusts, make sure you have documented a process of valuing the assets. It is best to have an independent valuation where possible. See the ATO's "Valuation guidelines for SMSF's" for further information.
Contributions: Make sure your fund receives all contributions for the financial year on or before 30 June, especially if contributions are made by electronic funds transfer. An hour too late could cause problems! Be aware of your contribution caps especially if you have made some large one-off contributions to any superfund in the past few years. If you are 65 or over, you need to meet the specific work test rules.
• Minimum pension payments: Ensure that the minimum pension amount is paid by your SMSF by 30 June 2015. Failure to do this will mean your fund won't receive the tax exemption for pension funds. If you have a pre-retirement pension check that you have not taken more than 10% of your funds as a pension payment. Pension payment amounts are set every 1 July based on the account balance at that time.
• Investment strategy: Compare the investments held with your investment strategy. Does the investment strategy align with the actual investments? Take the time to look at liquidity levels, investment returns, and review the individual member risk profiles with the investments made. At this time it would be wise to review the insurance needs for the members such as life cover, total permanent disability, and salary continuance insurance.
• Estate planning: Review what will happen should a member prematurely die. Ask yourself how will the fund continue? What death benefit nominations are in place? Are the investments able to be quickly cashed? If the fund has life insurance policies, are they appropriate for the members needs, and are the policies correctly set up in the fund?
• Inhouse assets: Ensure related party investments and loans are not over 5% of the funds' total assets.
• Trust deed: Your funds' trust deed is a very important document. It should be regularly updated to ensure your fund is up-to-date with all the superannuation changes. If your trust deed is over five years you should engage a legal specialist to upgrade your funds' trust deed.
• Engage all members: Probably the most important tip is, take the time to discuss the fund with the other members and trustees. Understand how much members will need in retirement, and if in the pension phase review how long the funds will last. This article is general information and does not address the circumstances of any individual.
This article is general information and does not address the circumstances of any individual.