Your 2013 end of financial year SMSF checklist

Your 2013 end of financial year SMSF checklist

Despite the rhetoric around possible changes to self managed super funds as a result of the recent Federal Budget, there is nothing new really to consider for EOFY preparation this year.  The changes from the Federal Budget will likely impact members’ preparation next year.

However, there are still some key points that not everyone may be aware of, or taking advantage of. Here are my top issues and strategies to focus on as we head towards the end of the 2013 financial year.

1. Contributions

a.    Free money?:  Likely to earn under $31,920 this financial year? You might be eligible for the super co-contribution, where the Government matches 50c for each $1 of super contribution you make, up to $500. Between $31,920 and $46,920 in income, the $500 is scaled down.

This is free money! A guaranteed return on your contribution. It’s pretty hard to beat, particularly if you’ve got the cash and you’re eligible.

 b.    ‘Use them or lose them’:  Make the most of the contribution limits. If you haven’t reached your limits for either concessional or non-concessional contributions ($25,000 and $150,000 per person respectively) and you have the ability to do so, contribute during June. Do that extra salary sacrifice if you can.The limits are ‘use them or lose them’ – you can’t carry forward the unused portion from year to year.

2. Pensions

a.    Make your minimum pension payment or face 15% tax on earnings:  Make your minimum pension payment for the year. If you haven’t made your minimum pension you may not qualify for the exempt current pension income deduction. You’ll have to pay the 15% tax on earnings (the same as being back in accumulation phase), so don’t forget!

 b.    A month tax free:  Considering starting a pension? Start during June. You’ll get the benefit of a month’s tax free status, but if you start in June you won’t need to pay a minimum pension to qualify.

3. Valuations

For those self-managed super funds that own property (both commercial and residential), unlisted shares or units, or other more exotic investments such as artwork, don’t forget that these investments need to be revalued, at least every three years. While valuing for the preparation of SMSF financial accounts and statements doesn’t necessarily need to be conducted by an independent and qualified valuer, the valuation must be based upon objective and supportable data. (For more information see the valuation guidelines for self-managed super funds published on the ATO website.)

Interestingly, there is something that members can actually cross off their EOFY checklist.  Originally the proposed change was that in-specie share contributions would cease to exist post 30 June.  That change has been scrapped and in-specie share contributions will continue to exist.  So please note, from 1 July, if you have shares that you want to contribute directly to your super fund, you are free to do so.

Finally, do a general, overall review. Have you considered life insurance? Updated your investment strategy? Made sure that any death benefit nominations are still valid? Now is a good time to check all of these things to ensure you enter the new financial year with all of your SMSF housekeeping in order.

Click here to find out how Rivkin Super can help you manage your SMSF. 

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