Learn To Invest
Stocks Special Reports LICs Credit Funds ETFs Tools SMSFs
Video Archive Article Archive
News Stocks Special Reports Funds ETFs Features SMSFs Learn


Preparing your SMSF for end-of-financial year

Anthony Fensom  |  13 Jun 2018Text size  Decrease  Increase  |  
Email to Friend

Page 1 of 1

Following are some expert tips on getting your self-managed super fund into the best shape possible before the end of financial year on 30 June, 2018.

"Always make sure you have taken at least the minimum pensions before 30 June. If you have more than $1.6 million in super, the amount transferred to your pension was restricted to that amount as of 1 July 2017, so your minimum will be based on that amount rather than your whole superannuation balance," says Liam Shorte, an SMSF Specialist Adviser and director of Verante Financial Planning.

"If taking more than the minimum, consider taking the excess as a lump sum commutation. If under $1.6 million, then it will reduce your transfer balance cap and you can put more funds into the pension, subject to the contribution rules.

"If over the $1.6 million in your superannuation account(s) then consider taking the excess amount required form your accumulation balance so that you leave as much as possible in pension phase, that is, the minimum from the pension and any excess as a lump sum commutation," Shorte says.

It's not too late to contribute

From 1 July 2017, anyone eligible to make personal super contributions can claim that contribution as a personal tax deduction, regardless of their work status. The removal of the previous 10 per cent test opens up more options to those with multiple jobs or salaries as well as the self-employed, Shorte says.

"The old rule meant you had to be self-employed or have no employment income in order to claim a deduction for your concessional super contributions," he says.

"It’s not too late to put in super splitting to move last year’s (2016/17) concessional contributions to your spouse’s account, but you should make sure you do it soon to give the super fund time to process it."

For those with an income below the lower threshold ($36,813 for fiscal 2018) or to gain a partial benefit below the higher threshold ($51,813 for fiscal 2018), consider allocating up to $1,000 into super as a non-concessional contribution before financial year-end to gain up to a $500 co-contribution, Shorte suggests.

"If your spouse’s income is below $37,000 or less (or up to $40,000), then consider a $3,000 spouse contribution to boost their super and reduce your tax using the tax offset of up to $540 per annum," he says.

Shorte urges any such contributions to be paid before 20 June "to allow time for mistakes".

"Not ensuring that contributions have been received into the SMSF’s/superannuation fund’s bank account by close of business on 30 June and failing to allow bank/clearinghouse processing time is just taking unnecessary risk," he says.

"For employees, check your pay slips to see how much has been contributed and ask payroll when the last payment for the year will be made (check when last year’s June super hit your account) before topping up to the $25,000 limit."

Capital gains tax relief

SMSF members may also be eligible for CGT relief, according to SMSF specialist Monica Rule.

"SMSFs affected by the $1.6 million transfer balance cap and that have transferred assets from either the retirement pension account and/or the transition to retirement income stream account to the accumulation account of their members, may reset the cost base of the assets and make an irrevocable capital gains tax (CGT) relief election when lodging their fiscal 2017 tax return," Rule says.

However, SMSFs have only until 30 June to claim such CGT relief under an extension provided by the Australian Taxation Office (ATO).

First Home Super Saver

Rule also points to changes in the First Home Super Saver Scheme to note for SMSFs.

From 1 July 2018, SMSF members will be able to withdraw concessional and non-concessional contributions of up to $15,000 per year to a lifetime maximum of $30,000 from their SMSF to purchase or construct their first home. Such contributions along with deemed earnings can be withdrawn from 1 July 2018, with any withdrawals taxed at the member’s marginal tax rate plus the Medicare Levy with a 30 per cent tax offset.

"Any contributions made in the 2017/2018 financial year will count towards what a person can take out from 1 July 2018. The associated earnings will be calculated as if the contribution was made on 1 July 2017, even though it may have been made as late as June 2018," Rule says.

Preparing for 2019

Shorte recommends putting in writing to the SMSF accountant or administrator that they report current pensions for transfer balance account reporting (TBAR) by 28 July to the ATO.

"Let them know your plans as regards pensions and lump sums for 2018/19 so they can schedule TBAR quarterly reporting if your balance is over $1 million," he says.

With a number of other proposed changes to super in the pipeline from the 2018 Budget, change appears the only constant for SMSFs as they look towards the start of the new financial year.


More from Morningstar

• Exit of Ingham's CEO sparks analyst jitters

• Top ten articles of last week

Make better investment decisions with Morningstar Premium | Free 4-week trial


Anthony Fensom is a contributor to Morningstar Australia

© 2018 Morningstar, Inc. All rights reserved. Neither Morningstar, its affiliates, nor the content providers guarantee the data or content contained herein to be accurate, complete or timely nor will they have any liability for its use or distribution. This information is to be used for personal, non-commercial purposes only. No reproduction is permitted without the prior written consent of Morningstar. Any general advice or 'class service' have been prepared by Morningstar Australasia Pty Ltd (ABN: 95 090 665 544, AFSL: 240892), or its Authorised Representatives, and/or Morningstar Research Ltd, subsidiaries of Morningstar, Inc, without reference to your objectives, financial situation or needs. Please refer to our Financial Services Guide (FSG) for more information at www.morningstar.com.au/s/fsg.pdf. Our publications, ratings and products should be viewed as an additional investment resource, not as your sole source of information. Past performance does not necessarily indicate a financial product's future performance. To obtain advice tailored to your situation, contact a licensed financial adviser. Some material is copyright and published under licence from ASX Operations Pty Ltd ACN 004 523 782 ("ASXO"). The article is current as at date of publication.

Email To Friend