End of the financial year – are your clients’ SMSFs ready?

With the end of the financial year fast approaching, now is the perfect time to ensure everything is in place for your SMSF clients before 30 June.

The following are some superannuation strategies that you need to keep in mind.

Contribution caps

Before the end of the financial year you should consider whether your clients:

  • have any income available to contribute to their fund; and
  • review their total contributions to ensure they are below the caps

Non-concessional (after tax) contributions are limited to $100,000 for the 2020 financial year and concessional (before tax) contributions are limited to $25,000.

Members under 65 years of age have the option of contributing up to $300,000 over a three-period depending on their total super balance.

Anyone making large superannuation contributions should exercise extreme care to avoid excess contribution penalties.

Contributions are included in a financial year if they are received by a fund during that year. This means that they must be in the SMSF’s bank account by 30 June. With 30 June falling on a Tuesday this year, it would be prudent to ensure your clients have made their contributions the week prior to ensure they are received by their funds prior to the end of the financial year.

Drawing superannuation pensions

If your clients are in pension phase, you need to ensure the minimum pension has been paid to them for this financial year. Where these requirements have not been met, their fund will be subject to 15% tax on their pension investments, rather than being tax free. Keep in mind this year the minimum pension has been halved.

Personal superannuation contributions

From the 2020 and future financial years, most people regardless of their employment arrangement, will be able to claim a deduction for personal super contributions they make to their fund until they turn 75.

Individuals who are aged between 65 and 75 will need to meet the work test to be eligible to claim the deduction.

If clients wish to claim a tax deduction for personal contributions, they must complete and lodge a notice of intent for their fund before June 30 and have this notice acknowledged (in writing) by the fund. Any contribution also needs to be received by a fund before June 30.

Co-contributions

A reminder if clients meet the relevant work tests and qualify, it is also worth considering if they can take advantage of the Government super co-contribution.

SMSF fund expenses

For members in the accumulation phase, it is important that any expenses are actually incurred or paid before 30 June to be deductible in the current financial year.

Rebalancing accounts between spouses

The end of financial year is also the perfect opportunity to rebalance pension accounts between spouses, to ensure that super balance are as even as possible and the $1.6 million transfer balance cap is maximised for each member.

Early Access to Super

Finally, any clients who have taken advantage of early access to $10,000 from their SMSF need to minute the action to satisfy fund compliance. For a sample minute to use in your business please contact Olivia Long in our office.

The information in this article contains general advice and is provided by Primestock Securities Ltd AFSL 239180. That advice has been prepared without taking your personal objectives, financial situation or needs into account. Before acting on this general advice, you should consider the appropriateness of it having regard to your personal objectives, financial situation and needs. You should obtain and read the Product Disclosure Statement (PDS) before making any decision to acquire any financial product referred to in this article. Please refer to the FSG (primefinancial.com.au/fsg) for contact information and information about remuneration and associations with product issuers. This information should not be relied upon as a substitute for professional advice, and we encourage you to seek specific advice from your professional adviser before making a decision on the matters discussed in this article. Information in this article is current at the date of this article, and we have no obligation to update or revise it as a result of any change in events, circumstances or conditions upon which it is based.

SPEAK WITH US TODAY

A unique and personal service approach and support for all your business advisory and personal wealth management needs

Request a consultation

A unique and personal service approach to support all your business advisory and personal wealth management needs.

Request a consultation