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SMSF’s are required to comply with a myriad of legislation and regulations. From time to time we come across some common issues with funds, which if left unattended could result in significant issues in the future.
Documentation
SMSF’ trustees have obligations to keep various documents for specified periods of time. We often see situations where the trustees believe their accountant or adviser is keeping the appropriate records, but the reality is no one has maintained the records.
Annual Pension Withdrawals
Where a member is receiving a pension from a SMSF, there is a minimum amount that needs to be withdrawn each financial year in order for the SMSF to be eligible for the tax exemption on the income generated on assets supporting a pension. A review of the amount needed to be paid before the end of the financial year can ensure the fund is paying a pension and all tax benefits are received.
Contribution Rules
When a member is over 65 years of age there is a work test required to be passed each year, in order for the member to be eligible to contribute further amounts to superannuation. The work test requires that the individual has worked a minimum of 40 hours in a period of no longer than 30 days at any time within the financial year. The work needs to be for remuneration, and as such volunteer work does not meet the requirements. If the work test is not met a SMSF is unable to accept a contribution for that member, which may potentially lead to additional tax being payable as compared to what was planned for the year.
The above example highlight some common issues that can be easily addressed by speaking with your adviser.
This page has been prepared by RSM Financial Services Australia Pty Ltd ABN 22 009 176 354, AFS Licence No. 238282.
As everyone's circumstances are different and this article doesn't take into account your personal situation, it is important that you consider the above in light of your financial situation, needs and objectives, and seek financial advice before implementing a strategy.
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