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  • Matt Heighway

Preparing Your SMSF for End of Financial Year - 2024 Edition

Updated: Jun 14


Super Fund members reviewing documents


As the end of the financial year approaches, it’s crucial in your role as trustee of your Self-Managed Super Fund (SMSF), to ensure that your SMSF is compliant and that you have all the records your Accountant requires. Each year there are a number of basic tasks that you can do to keep thing on the right side of the Australian Taxation Office (ATO) and help you grow your balance (and importantly not deplete it with unnecessary late lodgement fines!)


Meeting Minimum Pension Standards


If your SMSF is in the pension phase, make sure that any required minimum pension payments have been made. The ATO mandates specific minimum pension amounts based on your age and the value of your pension account, and failing to meet these requirements can have adverse tax consequences. Find out more about minimum pensions here - https://www.ato.gov.au/individuals-and-families/super-for-individuals-and-families/self-managed-super-funds-smsf/in-detail/smsf-resources/smsf-technical-pensions/pension-standards-for-self-managed-super-funds


Review Contributions


One of the first steps in preparing your SMSF for the EOFY is to review all contributions made throughout the year and understanding whether a tax deduction is to be claimed for the contribution and who is claiming it. If your personal accountant intends to claim a deduction in your personal tax return you need to ensure that the correct paperwork is in place, and it is all executed prior to your personal tax return being lodged. Don’t get caught up in backdating documents.


Asset Valuations


Accurate asset valuation is a key component of EOFY preparations for your SMSF. The ATO requires all SMSF assets to be valued at their market value as of 30 June. This valuation process is critical for determining the SMSF’s net value and ensuring accurate financial reporting. To comply with ATO guidelines, trustees should obtain independent valuations for assets where possible, or use reliable and documented methods to determine market value. This includes valuing properties, shares, collectibles, and other investments within the SMSF. Proper valuation not only ensures compliance but also provides a clear picture of the SMSF’s performance and financial position.


Record-Keeping and Documentation

 

Maintaining accurate and up-to-date records is essential for the smooth operation and compliance of your SMSF. As the EOFY approaches, ensure that all transactions are properly recorded and that supporting documentation is readily available. This includes bank statements, invoices, contracts, and any other relevant documents. A handy approach to save both you and your accountant time is to get the documents to the accountant throughout the year. Speak with your accountant about what would work for them, for instance you could have any SMSF related document (like a rental statement) that is emailed to you automatically forwarded to your accountant.


Investment Strategy


Whilst getting all your records together it is a good time to review your investments strategy. The investment strategy should be tailored to your SMSF’s objectives, risk tolerance, and liquidity needs. If there have been significant changes in the market or your personal circumstances, it may be necessary to update the strategy to reflect these changes. If you are not sure where to start here, Best Practice SMSF has a handy guided checklist and template that you could use - https://www.bestpracticesmsf.com.au/investment-strategy-checklist


Lodgement and Compliance


Timely lodgement of your SMSF’s annual return is crucial to avoid penalties and ensure compliance. The first step is the preparation of the Financial Statements which are required to be audited by an independent auditor. The auditor reviews the SMSF’s financials as well as their compliance with regulatory requirements and reports back to the Trustee and if required, the ATO. This audit must be completed before lodging the SMSF Annual (Tax) Return. The independent auditor will usually be engaged by your accountant when they prepare your SMSF Financial Statements.. Accountants can get very busy around lodgement deadline time so if you can have everything in order well before that, you will avoid any late lodgement penalties.


Compliance Check


Ensuring that your SMSF remains compliant with current laws and regulations is paramount. Review your trust deed to ensure it is up to date and reflects any legislative changes. The trust deed is a vital document that governs the operation of your SMSF and keeping it current is essential for compliance. Additionally, stay informed about any changes in SMSF regulations and ensure your SMSF adheres to them. This includes understanding any new reporting requirements, contribution rules, and pension regulations. Regularly reviewing compliance can prevent costly penalties and ensure the smooth operation of your SMSF.

If you are aware of any breaches that may have happened during the year it is essential that you let your accountant know prior to the end of the year so they can assist you to put in place an appropriate rectification plan.


Consider Professional Advice


Navigating the complexities of SMSF management can be challenging, especially as the EOFY approaches. Engaging with a financial adviser or SMSF Specialist can provide valuable insights and personalised advice. A financial adviser can help you develop a tailored strategy to maximize your superannuation benefits and ensure compliance with regulatory requirements. Similarly, working with a tax accountant can ensure that all tax obligations are met and that you’re taking full advantage of available tax deductions and concessions.


Preparing your SMSF for the end of the financial year requires careful planning, accurate record-keeping, and a thorough understanding of regulatory requirements. By following these steps, you can ensure your SMSF remains compliant, tax-efficient, and well-positioned to achieve your retirement goals. Whether you’re managing contributions, valuing assets, or seeking professional advice, taking a proactive approach will help you navigate the complexities of SMSF management and make the most of your superannuation savings.


Find out about Lifetime SMSF's personal and affordable approach to SMSF Administration right here.

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