With 30 June fast approaching, now is the time to prepare and take action to ensure you mininise your tax commitments. This article will provide a summary of items to consider for SMSFs in the lead up to the financial year end, including several items that are unique this year due to COVID-19.

First and foremost, SMSFs should ensure they have addressed any issues that arose in their 2019 accounts. This may be due to an in-house asset which was above 5%, loans to members which needed to be repaid or assets which were not recorded in the correct name. These minor breaches can become more significant if they have not been addressed.

Next SMSFs should look at any existing in-house assets that are under 5% and ensure that this is still the case. With the market dropping as a result of COVID-19, the value of other assets may have declined and therefore the in-house asset’s percentage may have increased.

Many SMSFs receive rent from a related party due to a commercial property investment and the rent received this year may have dropped due to the impact of COVID-19. The ATO has confirmed this is allowable if for commercial purposes but trustees should ensure they have documentation ready to provide their auditor to substantiate the rent drop and prove it was done for legitimate reasons.

Finally SMSFs should look at the contribution and pension limits for the year and ensure members have followed these rules. The pension withdrawals for the year have halved due to COVID-19, so members are not being forced to take out as much this year. However they still need to meet these revised minimum withdrawals to access the tax concessions available to funds paying out account based pensions. Although the pension limits have changed, the rules regarding contributions remains the same with the standard $25,000 concessional contribution and $100,000 non-concessional contribution limits still in place. This year is the first year the carry forward concessional contribution rules apply so some members may be able to contribute more than $25,000 depending on their circumstances.

As with all superannuation matters, we recommend that you seek and obtain personalised financial advice. This article provides only general advice which has not been tailored to your individual circumstances. If you would like advice, please do not hesitate to contact us.