Six steps to prepare your SMSF for EOFY

Make the most of your self-managed super fund by preparing for the end of financial year with these tips:

1. Remember, there’s no ban on off-market transfers

In May, the government decided to scrap its proposed ban on off-market transfers, which was set to take place on July 1.

Rivkin Super manager Charity Bru says “in specie” share contributions continue to exist.

“From July 1 if you have shares you want to contribute directly to your super fund you are free to do so,” she says.

SMSF Professionals’ Association of Australia’s Graeme Colley says if you are considering transferring shares as an “in specie” or non-cash transfer make sure you don’t exceed contribution caps. It’s also important to confirm the acquisition of the listed securities is consistent with your fund’s investment strategy.

Colley says it’s important to keep in mind the change to the law, which occurred on July 1, 2012, that states all records for the fund and reporting relating to the fund must be kept on a market value.

2. Take advantage of co-contribution

If you have earned under $31,920 this financial year you may be eligible for the super co-contribution, where the government matches 50 cents for every dollar of non-concessional super contributions made for up to $500.

The $500 amount is scaled down when earnings are between $31,920 and $46,920. If you earn more than $46,920 you are not eligible for this scheme.

To estimate your super co-contribution entitlement and eligibility use the ATO’s co-contribution calculator.

3. Make the most of contribution limits

Concessional contributions are employer contributions, including those made under a salary sacrifice arrangement or, for people who are self-employed, personal contributions claimed as a tax deduction. The limit for concessional contributions is $25,000 per person, while the non-concessional limit is $150,000 per person.

Colley says if you’re under 65 you can make a non-concessional contribution of up to $450,000 over a three-year period.

If you’re older than 50, remember, the concessional contribution has been reduced to $25,000.

Colley says over 50s may need to take action before the end of the financial year to make sure the cap is not exceeded to avoid being hit with an excess contributions tax.

From July 1, the amount goes to $35,000 for anyone who is 60 or over, if you turn 60 during the 2014 financial year.

Bru says if you haven’t yet reached your limit, top up in June before it’s too late.

“Do that extra salary sacrifice if you can. The limits are ‘use them or lose them’ – you can’t carry forward the unused portion from year to year,” she says.

4. Find out if you claim a tax deduction for your personal super contributions

You can claim a tax deduction for your super contributions if you are eligible.

If you are self-employed or don’t work at all but contribute to your super, you may be able to claim a tax deduction for your super contributions.

To be considered eligible you have to satisfy the maximum earnings as an employee condition, which means you earn less than 10% of the total of your assessable income, reportable fringe benefits and the total of your reportable super income contributions for the financial year.

If you are 75 or over, you can claim only claim reductions for 28 days of the month following the month you turned 75.

Colley recommends ensuring you are eligible to claim the deduction.

“Pro-actively seek advice if you are unsure,” he says. “Also ensure you keep all relevant paperwork to save stress when it is time to claim a benefit or a deduction.”

5. Don’t be caught out by excess contributions tax

Exercise extreme care when making large super contributions. Colley says investors can be hit with excess contribution penalties depending on the amount and type of contribution made.

“Any type of contribution made during the two preceding financial years may impact on the contributions that can be made this financial year,” he says.

Fund deductions aren’t usually significant for SMSF members in the accumulation phase, just remember expenses have to be incurred or paid before June 30 to be deducted in that year.

Those drawing a pension from their SMSF need to make sure they have received the required minimum pension by June 30, says Colley.

“Otherwise the investment income derived from the assets supporting that pension may impact on the contributions that can be made this financial year.

“You’ve really got to make sure your minimum pension payment is made from the fund of that year. If not, the income on your pension investment in the fund gets taxed at 15%. If you meet the rules it’s tax free,” he says.

6. Revalue your assets

If you own property, unlisted shares, units or artwork through your SMSF, remember to revalue these assets at least every three years.

Bru says valuing for SMSF financial accounts and statements doesn’t have to be conducted by an independent and qualified valuer.

“But the valuation must be based upon objective and supportable data,” she says.

But you still have to conduct the valuation objectively. For instance if you have a property, if you are going to do the valuation you need to check prices in the area for properties that have sold. The easiest process is to ask.

If you’re unsure, check out the valuation guidelines for SMSF on the ATO website.

And don’t forget…

The end of financial year is a great time to give your SMSF an overall review. Make sure you’ve updated your investment strategy, your death benefit nominations are still valid and consider taking out life insurance if you don’t have it.

“It’s good to take time once a year to take stock of what you’ve got,” says Bru. “Now is a good time to check all of these things to ensure you enter the new financial year with all of your SMSF housekeeping in order.”

This article originally appeared on SmartCompany.