Your SMSF End of Financial Year Checklist

Welcome to our 2013 SMSF end of financial year Trustee check list

There are 4 main issues to check are:

1. Contributions are within the limits
2. Minimum pension payments are made
3. Investment strategy now includes insurance consideration
4. Binding death benefit nominations are reviewed

Let’s take a closer look

Contributions for 2013

Some issues to watch out for:

• Make sure the maximum limit of $25k is not exceeded as there are significant tax penalties
• Add in contributions from all sources including insurance and salary sacrifice arrangements
• Non-deductible contributions not to exceed $150k-or $450k if using the 3 year bring forward rule
• Last minute contributions must be in the fund’s bank account by 27 June

Minimum pension payment

If you are in pension mode please check the minimum pension payment has been made.  If unsure please call us. Again all pension payments to be out of the fund’s bank account by 27 June.

Investment strategy and risk insurance considerations

Last year new regulations require SMSF trustees to include as part of the investment strategy to consider insurance for the fund members.

This can be a tricky area and I highly recommend you seek advice.

There are significant advantages having insurance inside your super fund but unless you appreciate and understand the estate planning consequences this may not be right for you

Death benefit nominations

One of the advantages of a SMSF is the ability of members and the trustees to have greater control around the payment of death benefit entitlements.

To maximise this advantage a Binding Death Benefit Nomination (BDBN) is commonly used. 

A BDBN legally directs the fund trustee (regardless of the fund trust deed rules) by instructing the trustee telling them who their super death benefit is to be paid to, what proportion they are to receive and in what form (i.e. pension, lump sum or both) their death benefit is to be paid. 

However a Binding Death Benefit Nomination form is only valid for 3 years and needs to be updated to keep it legally binding.

There is also the estate planning issue of understanding your super death benefit if paid to a person does not form part of your estate.

Lump sum or pensions

Lastly it is vital you understand by nominating the form of your death benefit as a lump sum, there could be capital gains tax implications or tax on the insurance component so please seek advice if you are unsure.

Wills

Reviewing your will is an annual event even if it is just to say nothing to do.

Many people have out-dated wills and also super is mentioned in the will as a matter of course but may not have any practical application at all because a Binding Death Nomination was used and as such the super death benefit does not go to the estate

CALL TO ACTION

• In summary all contributions and pension payments must be done by 27 June
• Post 1 July amend your investment strategy detailing what considerations have been made about including insurance inside the fund
• Review your Binding Death Benefit Nomination to ensure it is current and in line with your wishes
• Review your will as your super may not be part of the estate

If you are unsure about any aspect of the end of year checklist please call Lily Tan, Kelly Morgan or myself on 02 9238 1188.