SMSF checklist for the end of financial year

With the end of the financial year just around the corner, it is time to get your Self Managed Super Fund (SMSF) in order for tax time.

1. Ensure your minimum pension payments have been made

The government has halved the minimum amount members must withdraw from their super fund as a pension for 2019/20, 2020/21, 2021/22 & now also the 2022/23 financial year. This is an acknowledgment that members may have seen their account balances diminish as a result of the pandemic's impact on the share markets.

The minimum amounts for the 2022 financial year must be withdrawn by 30 June 2022. It’s a good idea to leave plenty of time for financial institutions to process these payments, so best not to leave it until the last day.

2. Timing of contributions

If you are making a contribution for the 2022 financial year, the money must hit the super fund’s bank account by the close of business on 30 June 2022. Be careful of making contributions through clearing houses as they can often hold on to these contributions for 7 - 30 days before presenting them to the individual’s superannuation fund. It’s when the fund receives the payment that the contribution is counted.

3. Changes to the work test and contribution limits

The government changed the contribution work test rules from 1 July 2020 to extend the ability to make contributions from age 65 up to age 67 without the requirement to pass the work test. This provides a previously unavailable opportunity for those who can’t pass the work test and are aged 65 to 66 to increase their super balances with further contributions.

The 2022 concessional contribution cap is $27,500 and includes employer Super Guarantee contributions, salary sacrifice, and personal deductible contributions. The 2022 non-concessional contribution cap is $110,000.

4. Review your ‘carry forward’ concessional contribution cap

The carry forward rule allows individuals to make additional concessional contributions in a financial year by utilising unused concessional contribution cap amounts from up to five previous financial years (the first available year being 2019). If your total superannuation balance was less than $500,000 at 1 July 2021 and you have not contributed the maximum concessional contribution each year since 2019, you can make “catch up” contributions prior to 30 June 2022.

5. Asset valuations

Regulations require assets to be valued at market value each year, including real estate and collectibles. The valuation must be based on objective and supportive data, so make sure you have evidence to support your valuation as well as documentation of the methods used.

6. Investment strategy

The trustees of SMSFs are required to have a current investment strategy for their self-managed super fund. The regulations require the trustees to make, carry out, and document decisions about investing the fund’s assets and to carefully monitor the performance of the fund. The start of the new financial year is a good time to review the investment goals and whether the current strategy still reflects these.

7. Insurance

If your SMSF is required to hold insurance for its members, ensure the insurance is at an adequate level of coverage and the premiums are paid.

8. Record keeping

Ensure the super fund’s records are up to date to save on additional compliance fees. Examples of the records that we need include bank statements, current investment valuations, current leases/rental statements, purchase, and sales contracts for any new or sold investments, insurance policies, and year end statements.

Need help getting your fund in order? Contact the team at PKF today.