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End of Financial year checklist 2022

Pensions:
  • Ensure minimum pension paid, otherwise pension will cease and Fund will lose its tax exemptions on earnings.
  • For clients with a TRIS check maximum pension not exceeded.
  • Ensure complete pension minutes in relations to pension commencement and commutations.
  • Ensure that an indexed TBC report from the member’s MyGov is available
Covid19 impacts:
  • Reduced minimum pension rates by 50% for the entire 2021-2022 financial year. If member has met the original rates before the reduction they are not able to put the amount above the new minimum rates back to the fund unless they are eligible to make contributions. Contribution caps will apply.
Concessional (tax deductible) contributions:
  • Maximum contribution is $27,500 for all eligible members.
  • Lodge splitting contribution notices with super fund trustee
  • Everyone who is eligible to contribute will be able to claim a tax deduction for personal superannuation contribution. Member will be required to provide a notice of intent to claim a deduction form (S290-170 form) to the tax Office.
  • If Member is in the 67-74 age group, ensure work test has been made prior to making contributions. Note new work test rule below.
  • Members can utilise unused concessional contribution cap amounts from previous years if they have a total super balance of under $500,000 on 30 June of the previous year. Five year carry forward period starts on 1 July 2018. Work test will still apply for people aged over 65. Any unused concessional contribution cap not used will expire after 5 years.
Non-concessional (Non-Tax Deductible) contributions:
  • Make payments to super fund by 30 June
  • For members who had in a total superannuation balance of $1.7M or more at 30 June 2021, they will not be permitted to make a non-concessional contribution to super for the 2021/22 financial year
  • For members who had a total superannuation balance between $1.37M and $1.7M, should seek advice as to how much non-concessional they can contribute, as they will be restricted to either $110,000 or $220,000 (if eligible)
  • This fiscal year the maximum personal non-tax deductible contribution is $110,000, however, if members are under 67 years of age (if eligible) they could contribute up to $330,000 prior to 30 June 2022. Members should seek advice if they triggered the bring forward rule in the previous two financial years, as with the reduction in the non-concessional limit, they may not be able to contribute or be restricted to a lower amount
  • Voluntary contributions can still be made by retirees without meeting the work test if the member is in their first year of retirement and they have a total super balance of less than $300,000 at the end of the previous financial year. They will be able to utilise the three year bring forward rule if they meet the criteria for the work test exemption. The non-concessional contribution cap for the Fund is at $110,000 per member and up to $330,000 for the three year bring forward arrangement.
Downsizer Contributions to Super (Since 1 July 2018):
  • Members aged 65 or over can now make contributions to their super of up to $300,000 using the proceeds from the sale of their main residence regardless of work status or super balances.
  • A downsizer contribution into Super form must be signed and presented for audit process.
  • Note the age restriction reduces to 60 from 1 July 2022.
Asset valuation:
  • All assets are to be valued at market value. External valuation once every three years for properties held by SMSF.  Please note during the year the ATO updated its guidance to require valuations to include comparable sales data.
  • A signed valuation minute must be provided for properties that are held by the Fund but are not due for an external valuation (once every three years as per point above).
Related Party LRBAs:
  • Ensure related party loans are based on commercial options or loans are amended to comply with safe harbour benchmarks in PCG 2016/5.
Covid19 Impacts:
  • Temporary repayment relief may be offered. The repayment relief must reflect similar terms to what commercial banks are currently offering due to Covid19.
  • New terms may include temporary repayment deferrals with unpaid interest being capitalised on the loan.
  • Parties to the arrangement must document the change in terms to the loan and reasons why those terms have changed.
Leases of property or equipment to associated parties:
  • Ensure expired leases have been replaced
  • Make payment of any outstanding lease amounts
Covid19 Impacts:
  • The ATO will not take action if an SMSF gives a related party tenant a temporary rent reduction in the 2022 financial year due to the financial effects of Covid19.
  • Trustees should follow the guidance for rental relief in their respective state or territory. Trustee should also refer to the mandatory code of conduct for SME commercial leasing principles during Covid19.
  • If rent relief is granted by the SMSF landlord, ensure that a lease agreement with any amendments in compliance with the principles of the mandatory code is executed.
  • Provide evidence that the reason for the rent relief provided is due to Covid19 e.g. Jobkeeper program eligibility, letter from the tenant addressed to the SMSF Trustees describing the negative impact of Covid19.
  • Rent relief should be proportionate to the negative impact of Covid-19.
  • Rent relief noted above will apply to section 13.22C unit trusts.
Early Access to Super due to Covid-19:
  • If the Member have been granted early access of their super, please ensure that a letter of approval is provided for audit purposes.
In House Asset restriction changes due to Covid19:
  • If an SMSF exceeds the 5% in house asset threshold as at 30 June 2022, a plan must be prepared and implemented on or before 30 June 2021. However, the ATO will not take any compliance activity if the rectification plan was unable to be executed due to the market conditions. This will need to be documented by the SMSF Trustees.
Investment Strategies:
  • Investment strategies have become the object of increased ATO attention. The ATO advised that the investment strategies should:
  1. Not use generic 0 – 100% for investments in asset categories
  2. Reflect and justify the actual investment intentions of the Trustees
  3. Be reviewed at least annually and updated if necessary
  4. Comply with all aspects noted under Regulations 4.02 of the SIS Regulations

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