Superannuation & Your Self Managed Super Fund
As a Trustee of a Self Managed Superannuation Fund (SMSF) there are some key changes to be aware of.
Key Changes you Need to be Aware of:
SUPERANNUATION GUARANTEE INCREASES TO 11%
From 1 July 2023 the Superannuation Guarantee rate will increase from 10.5% to 11%. It is planned to increase by 0.5% each year until it reaches 12% on 1 July 2025.
If any SMSF members are paid on a “total remuneration” basis (a package inclusive of superannuation), this will mean that their take home pay will reduce by 0.5% unless the employer decides to increase their total remuneration by 0.5%.
For SMSF members who are paid wages or salary plus superannuation, then their take home pay will remain the same and the 0.5% increase will be added to their superannuation payments.
CRYPTOCURRENCY
The ATO is concerned that many SMSF Trustees believe their cryptocurrency gains are tax free or only taxable when the holdings are cashed back into Australian dollars.
Gains from cryptocurrency are similar to gains from other investments, like shares. Generally, as an investor, if your SMSF buys, sells, swaps for dollar currency, or exchanges one cryptocurrency for another, it will be subject to capital gains tax (CGT) and we have to report on it. CGT also applies to the disposal of non-fungible tokens (NFTs).
It is crucial that you keep good records of your cryptocurrency exchanges – especially for a Self Managed Superannuation Fund as the requirements to pass audit are so high.
The ATO has access to the data from crypto platforms and banks and is running data matching to ensure tax is paid on all crypto gains.
Things for you to do:
REVIEW YOUR INVESTMENT STRATEGY
Your investment strategy is your plan for making, holding and realising assets consistent with your investment objectives and retirement goals. It should set out why and how you’ve chosen to invest your retirement benefits in order to meet these goals.
The superannuation laws require that you must prepare and implement an investment strategy for your self-managed super fund (SMSF) which you must then give effect to and review regularly.
Your investment strategy should not be a “set and forget” document. You should review your strategy regularly to ensure it continues to meet the current and future needs of your members depending on their personal circumstances.
Certain significant events should also prompt you to review your strategy, such as:
a market correction
when a new member joins the fund or departs a fund
when a member commences receiving a pension. This is to ensure the fund has sufficient liquid assets and cash flow to meet minimum pension payments prior to 30 June each year.
You should also review your strategy at least annually and document that you have undertaken this review and any decisions made arising from the review. For example, you could do this as part of the annual trustee meeting minutes. You should then provide these minutes or other evidence of a review to your auditor. This will show that you’ve met the requirement to review regularly and, where necessary, revised your investment strategy.
PREPARE TRUSTEE VALUATIONS OF ANY PROPERTIES HELD
Each year SMSF Trustees are required to provide a market value for any properties held within the Superannuation Fund. These values need to be based on objective and supportable data. We usually recommend using something like realestate.com.au to find properties similar in type, location and condition and saving these down for your records.
We will be sending clients a template with their Records Requisition checklist to help with this process.
The property should be valued as at 30 June – so if something drastic happened to the property marked in September, and you are filling in the trustee valuation in September, you should be valuing the property as it was at 30 June.
REVIEW INSURANCE INSIDE YOUR SMSF
SMSF trustees need to consider the need for insurance cover for the fund members when creating and reviewing the fund’s investment strategy.
ATO PAYMENT DEFERRALS
We can liaise with the ATO and negotiate a deferral or repayment plan if you are having trouble paying any ATO liabilities. Please contact us immediately if you would like our help with this.
Plan for your 2023 Year End Compliance
For Clients, we will be organising a Records Requisition in July (a list of the documents we know we will need to get started on your 2023 year end work for your super fund).
Once we have all of this information, we will be able to get started on your year-end work.
We will be back in contact in January for the bank statements and other documents needed for the period 1 July – 31 December 2023 – to try and keep things as easy as possible for you, in case you need to locate additional documents for audit purposes, and then again in March or April 2024.
If you have any questions at all about the year-end process for your self-managed superannuation fund, please do not hesitate to contact us.
Tax Strategy
Thinking forward – if you would like to get more money into a superannuation environment as a part of your ongoing tax strategy - from 2020 the carry-forward rules may help. They allow you to make extra concessional contributions – above the general concessional contributions cap – without having to pay extra tax.
The carry-forward arrangements involve accessing unused concessional cap amounts from previous years. An unused cap amount occurs when the concessional contributions you made in a financial year were less than your general concessional contributions cap.
To use your unused cap amounts you need to meet two conditions:
Your total super balance at the end of 30 June of the previous financial year is less than $500,000.
You made concessional contributions in the financial year that exceeded your general concessional contributions cap.
The amount of unused cap amounts you will be able to carry-forward will depend on the amount you have contributed in previous years, starting from 2019. You can use caps from up to five previous financial years.
Please note that if your combined income and concessional contributions are above the Div 293 threshold of $250,000, then you may have to pay an additional 15% tax on these contributions.