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Giving your SMSF a spring clean

Anthony Fensom  |  23 May 2016Text size  Decrease  Increase  |  

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Anthony Fensom is a Morningstar contributor. This is a financial news article to be used for non-commercial purposes and is not intended to provide financial advice of any kind.


Having done your homework, you should have your self-managed super fund (SMSF) well prepared for the end of the financial year. Here are some tips for giving it a "spring clean" once 1 July comes around again.

Liam Shorte, a financial planner and SMSF specialist adviser at Verante, suggests a number of checks and considerations for trustees.

"Firstly, check the elections on your pensions. Under the new rules for pension transfer limits of $1.6 million, you need to consider that a reversionary pension option may be far more beneficial now than a binding death nomination to keep a deceased spouse's account in pension phase after their death," he says.

"It is also important to check trust deed rules for the move from transition-to-retirement income streams (TRIS) to account-based pensions (ABP). Some allow it to occur simply on meeting a condition of release, while others require the TRIS pension to be commuted and a new pension started. Consider updating your deed for maximum flexibility."

Trustees should also check old superannuation statements to double-check the contribution history with all previous funds from 1 July 2007.

"Do not rely solely on Australian Taxation Office data," Shorte warns.


Strategy changes

"SMSF trustees need to consider super splitting and evening up balances from much younger to make full use of both parties' non-concessional caps and pension transfer limits," Shorte says.

"Consider strategies that would help you move from transition-to-retirement to ABP prior to 30 June 2017, such as having a second job that ends after age 60, or retiring before the age of 65. Work the numbers to determine the better outcome."

Other proposed changes could include segregating assets in pension phase after 1 July, 2017. "For most, the pooled option will be the most suitable choice," Shorte says.

Trustees might also consider alternative investment structures for excess funds, such as family companies or trusts, or insurance bonds. It is important to maximise usage of last year's higher $30,000 or $35,000 concessional caps, pending proposed budget changes.