If you are paying a transition to retirement pension, you must also ensure the minimum payment is made (these are the same as for account based pensions). In addition, unless you have met a full condition of release or have enough unrestricted non-preserved benefits in your pension, you must ensure that your pension payment for this financial year does not exceed 10% of your balance at 1 July 2018 (or the start date if commenced this financial year).
The same message that applies to contributions applies here - make sure you allow sufficient time for electronic payments to arrive within the correct financial year.
It’s important to note that pension payments must be a cash payment, except for partial commutation of a pension.
It’s also important to ensure that you meet any extra conditions listed in your trust deed or pension terms that apply to your pension.
8. Do you need to obtain a market valuation of assets?
For assets that have a quoted market price, such as listed stocks and managed funds, it’s a simple process to value assets. But if your SMSF has assets that are unlisted assets, such as real estate and collectables, it’s a good idea to line up the relevant assessments early. While external valuations may not be required every year, superannuation law requires the SMSF trustee to determine the market value for each year’s set of financial statements and be able to justify that valuation.
9. Can you claim the Spouse Contribution Offset?
A tax offset may be available where you make a spouse contribution for your spouse and they earn less than $40,000 during the financial year. The maximum offset is available where you make at least a $3,000 spouse contribution and your spouse’s income does not exceed $37,000, and is tapered in the range $37,000 to $40,000.
The maximum spouse tax offset is $540 and is calculated as 18% of the lesser of:
- the amount of spouse contributions you make during the financial year
- $3,000, reduced (but not below nil) by the amount of the receiving spouse’s total income exceeding $37,000
10. Review your current investment strategy
With the start of the new financial year, it could be a good time to review your investment strategy. SMSF trustees are required by law to review their investment strategy regularly and to do so every 6 and 12 months is a good discipline to adhere to.
Reviewing fund performance to plan and revisiting the purpose and circumstances of the fund and its members will help determine if the initial goals and potential outcomes remain relevant and achievable.
Review with your adviser
Superannuation can be complex and the investment landscape is in a constant state of change. Reviewing your SMSF’s strategies with a trusted and accredited adviser can act as a sounding board and provide additional insights and opportunities, particularly in the transition from accumulation to retirement phases and estate planning.
Your SMSF End of Financial Year Checklist
- Calculate the contributions already made for the 2018-2019 year to determine how much contributions caps you have remaining
- Maximise concessional contributions using salary sacrifice or personal tax-deductible contributions
- Determine if you can bring forward non-concessional contributions
- Remember non-concessional contributions are limited by the value of your total superannuation balance just prior to the start of the financial year
- Have you taken into account any opportunity to use a downsizer contribution?
- Confirm the work test been met for relevant members
- Calculate your remaining transfer balance cap if commencing a retirement phase income stream (eg account based pension)
- Determine your plan for amounts in excess of the $1.6m transfer balance cap
- Review your current pension arrangements, including taking the required minimum pension amounts
- Review member’s income needs for the next 12 months
- Review current investment strategy and adjust as necessary
- Review current estate planning strategies and adjust if necessary
- Update market values for unlisted investments as at 30 June 2019
Be sure to obtain the advice of an SMSF Specialist Adviser if you are unsure about any of the items on the checklist. Our SMSF Specialist Team can help you find an adviser near you.
You can call the Commonwealth Bank SMSF Specialist Team on 1800 138 363.