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EOFY Action Checklist for SMSF Trustees

For SMSF trustees, EOFY is prime time to get stuck into the planning and actioning of important SMSF matters requiring attention before 30 June.

EOFY is almost upon us! For SMSF trustees, this means it’s prime time to get stuck into the planning and actioning of important SMSF matters requiring attention before 30 June. But before you look at your calendar, realise we’re already in June and panic; relax, grab a coffee and read our EOFY Action Checklist. It goes through all the essentials.

By tending to these matters and obtaining the relevant information prior to the year’s end, you can complete a smooth FY22 SMSF administration and audit process, ensuring pensions are paid and contributions are maximised before it’s too late. We’ve also added action points around SMSF investment strategies, estate planning and trust deeds to the checklist, so you’re set up to thrive in the year ahead.

Pay Pensions on Time and According to Payment Standards

Don’t leave pension payments to the last minute. Trustees must ensure all pensions are paid well in advance of 30 June to ensure all earnings remain exempt from tax.

SMSF trustees paying a pension to members of the fund are required to distribute a minimum pension payment annually. While earnings in respect to retirement phase pensions are exempt from tax, failure to adhere to the payment standards could cause the pension to cease. If a fund fails to meet the minimum pension payment requirements in a financial year, the pension will be taken to have ceased at the start of that financial year, impacting the tax status of distributions to members.

If you haven’t met the minimum payment requirements, remember that the government has extended the 50% reduction in the annual pension payment to members. This temporary COVID relief measure will also be extended into FY23.

If members have received amounts greater than the minimum pension requirement, and have maxed out their personal transfer balance cap, a tax-effective way to classify the payments could be as lump sums from accumulation or partial commutation from pensions. Members are required to request lump sums from the trustee prior to each payment, so putting this direction in place prior to the new FY will allow payments to be automatically allocated in accordance with the member’s instructions.

Action points for SMSF trustees:

  • Review pensions paid to members for the YTD, ensuring any remainder is paid well before 30 June, to ensure the reduced minimum is met
  • Determine if the member requires excess pension payments. If so, set up directions for the trustees to allocate payments tax-effectively
  • Consider TRIS members (those transitioning to retirement income streams) who turned 65, as they can now claim exempt current pension income (ECPI).

Value Investments at Market Value

Superannuation Industry (Supervision) (SIS) regulation 8.02B states that SMSF trustees must value all fund assets at market value when preparing the fund’s financial statements and accounts at EOFY.

If the SMSF has invested in property the asset only requires valuation every 3 years unless a significant event has occurred that impacts its value. A valuation from a real estate agent with comparison sales data is sufficient for audit purposes, but it must be obtained before 30 June, so don’t leave it too late.

When valuing investments, keep in mind how it may impact the members' total superannuation balance, as this can affect their entitlements to make contributions.

If the SMSF is leasing commercial property to a related party (for example, your fund is leasing to your business) you need to obtain a rental appraisal that proves the market value of rent is being paid. This is to ensure lease agreements with related parties are at ‘arm’s length’.

Action points for SMSF trustees:

  • Contact real estate agents to obtain valuations prior to 30 June
  • Get rental appraisals for commercial properties prior to 30 June.

Maximise Those Voluntary SMSF Contributions

Planning is crucial when it comes to members maximising their superannuation contributions. Don’t leave voluntary contribution payments to the last minute! These payments must land in the super fund’s bank no later than June 30, otherwise they can’t be attributed to the FY22 cap and will instead be counted as a FY23 contribution.

Concessional Contributions  

Each member of the fund has their concessional contributions capped at $27,500 regardless of age.

The most common concessional contributions are employer contributions and salary sacrifice, but a member may also choose to make personal concessional contributions where they claim a deduction in their personal income tax return.  

SMSF trustees must ensure the member has sufficient taxable income to claim the tax deduction.  

Members who haven’t maximised concessional contributions since 1 July 2018 may be eligible for catch-up contributions in this financial year, provided the total fund balance is less than $500,000.

Non-Concessional Contributions

The non-concessional (or ‘after-tax’) contributions cap is $110,000 (provided the total super balance is under $1,700,000) and members aged over 67 will have to satisfy the work test. For FY23, the work test will be abolished for all members making non-concessional contributions.

Members younger than 67 can take advantage of the non-concessional cap bring forward of up to $330,000 over 3 years, but trustees should take extra care here to ensure eligibility. Consider total super balances, any contributions made on a member’s behalf or any amounts withdraw and re-contributed.  

Members must also be aware if the SMSF has a limited recourse borrowing arrangement that was entered into or after 1 July 2018 where the members whose superannuation interests are supported by assets to which an LRBA relates and:

  • The member has satisfied one of the following conditions of release: retirement, terminal condition, permanent incapacity or attaining the age 65; or  
  • The LRBA is between the fund and one of its associates.

If either of the above points is satisfied then the members total superannuation balance also includes the member’s share of the outstanding balance of the LRBA.

Action points for SMSF trustees:

  • Make sure any final contributions to maximise the concessional or non-concessional contribution caps are made well before 30 June
  • When making personal contributions, ensure a notice of intent to claim a deduction for personal contributions is prepared and provided to the SMSF
  • Lodge a Request to adjust concessional contributions with the ATO when reserving a contribution in FY22 to avoid an excess concessional contribution being issued
  • Planning is crucial to avoid exceeding caps for FY22 and beyond.

Review the SMSF Investment Strategy

There are regulations to ensure a SMSF’s investments are in line with its strategy. This strategy needs to be formulated in writing and reviewed regularly. EOFY is a good time to ensure the strategy:

  • has regard to the whole of the fund’s circumstances
  • considers investment risk and returns, diversity, liquidity and the ability to discharge liabilities as they fall due
  • considers the insurance needs of members
  • is regularly reviewed.

If an SMSF member's circumstances have changed, or the fund invested into new types of assets, then the strategy needs to be updated.

Action points for SMSF trustees:

  • Review the fund’s strategy and update it prior to every EOFY.

Ensure Estate Planning is Keeping Up With Life Changes  

Like the Greek philosopher Heraclitus said, there is nothing permanent except change. Any annual review should make sure estate planning is keeping up with any life changes of all SMSF members. One of the most important aspects of any estate plan is that it remains current and reflects their wishes.

Estate planning reviews should address things like wills, enduring powers of attorney and binding death benefit nominations.

SIS regulations state that death benefit nominations can now be made non-lapsing, meaning they never expire unless revoked. Members who have had these nominations in place for some time should ensure they’re reviewed and updated.

Action points for SMSF trustees:

  • Ask SMSF members this question: Have there been any material changes in your world that warrant you revisiting your estate planning?

Revisit the SMSF Trust Deed

With so many changes in the world of superannuation, it is recommended that SMSF trustees revisit and update the fund’s trust deed, so it remains relevant to its members. Together with super laws, the trust deed forms the fund’s governing rules. An up-to-date deed provides flexibility for members and important strategic opportunities for the fund.

Action points for SMSF trustees:

  • Review the SMSF’s trust deed annually and consider updates.


*Disclaimer – Please note the content of this article is factual in nature and should not be relied upon. We highly recommend you consult with your SMSF accountant and financial advisor prior to taking any action.

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