2020 EOFY Checklist

Superannuation & Self-Managed Super Funds


2020 EOFY Checklist

End of Financial Year checklist 2020:


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 relation to pension commencement and commutations

COVID-19 impacts

Reduced minimum pension rates by 50% for the entire 2019 – 2020 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 $25,000 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 65-74 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 $1.6M or more at 30 June 2018, they will not be permitted to make a non-concessional contribution to super for the 2017/18 financial year

For members who had a total superannuation balance between $1.4M and $1.6M, should seek advice as to how much non-concessional they can contribute, as they will be restricted to either $100,000 or $200,000 (if eligible)

This fiscal year the maximum personal non-tax deductible contribution is $100,000, however, if members are under 65 years of age (if eligible) they could contribute up to $300,000 prior to 30 June 2019. 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. However, they are unable to utilise the three year bring forward rule even if they meet the criteria for the work test exemption. The non-concessional contribution cap for the Fund is at $100,000 per member.

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

Transfer Balance Account Reporting (TBAR)

From 1 July 2018, you will need to determine which of you SMSF clients will fall into the quarterly or annual TBAR regime. Once the reporting timeframe is set, it will remain for the life of the fund

While some leniency are shown by the ATO in the 2019 financial year, timely reporting is expected from the super fund from 1 July 2019

Asset valuation

All assets are to be valued at market value. External valuation once every three years for properties held by SMSF. (Same as 2019 checklist)

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

COVID-19 Impacts:

Temporary repayment relief may be offered. The repayment relief must reflect similar terms to what commercial banks are currently offering due to COVID-19

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

COVID-19 Impacts:

The ATO will not take action if an SMSF gives a related party tenant a temporary rent reduction in the 2020 and 2021 financial year due to the financial effects of COVID-19

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 COVID-19

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 COVID-19 e.g. Jobkeeper program eligibility, letter from the tenant addressed to the SMSF Trustees describing the negative impact of COVID-19

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 COVID-19

If an SMSF exceeds the 5% in house asset threshold as at 30 June 2020, 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:

Not use generic 0 – 100% for investments in asset categories

Reflect and justify the actual investment intentions of the Trustees

Be reviewed at least annually and updated if necessary

Comply with all aspects noted under Regulations 4.02 of the SIS Regulations

If you have any questions in relation to any of these, or would like to speak with an advisor, please contact the Partners Wealth Group Audit team today, and they will be more than happy to help you.