Every self-managed superannuation fund (SMSF) is required to be audited each financial year. The audit serves two purposes in that a financial audit is undertaken to verify the financial statements. Secondly, the audit reviews compliance with the superannuation laws.
In considering the documentation required for audit for the 2016 financial year the following should be considered:
If your SMSF owns collectibles, the transitional period to adopt the new rules and requirements will expire on 30 June 2016. If you hold ‘exotic’ or personal use assets and do not yet have insurance, hold or lease the asset at your private or related party residence or have not appropriately documented the storage decision, you may be at risk of breaching these regulations. We anticipate that beyond 1 July 2016, there will be more ATO activity reviewing these types of investments.
The assets of a SMSF are required to be reported at market value annually. For assets with no underlying market (ie property), it may be necessary to obtain a new valuation for use in the 2016 financial statements to ensure compliance with this new measure.
Related party rentals
Where a business property is leased to a related business entity it is necessary to ensure that a market value rental is paid, in accordance with a written lease. As such, when entering in to a lease an independent rental valuation should be obtained. Once the lease is in place the terms of the lease in terms of rental amount and payment should be complied with
Limited Recourse Borrowings
The ATO has recently released a document in relation to the limited recourse borrowings, where the funds are borrowed from a related party. The ATO has allowed SMSF’s until 30 June 2016 to be within their Safe Harbours. More information is available in the article ‘SMSF Borrowings from Related Parties’ as a part of this update.
Should you have any queries in relation to the application of the above or any other SMSF audit requirements please contact your adviser at RSM.