There are several critical issues self-managed super fund (SMSF) trustees and their advisers must consider when lodging their 2016-17 SMSF annual returns, according to SMSF Association CEO John Maroney.
Transitional capital gains tax (CGT) relief, transfer balance account reporting and reviewing superannuation contributions should all be on their radar as they prepare for the end of this financial year, he said.
“SMSF trustees need to be aware they may have to report a transfer balance cap income stream before 1 July 2018. If a member in retirement phase was receiving an income stream on 30 June 2017 that continued to be paid after that date, this income stream must be reported on the Transfer Balance Account Report (TBAR) form before 1 July 2018,” Maroney said.
“Events that occur during the 2017-18 financial year will need to be reported either by 28 October 2018 or annually in the 2017-18 SMSF annual return, depending on an individual SMSF’s timeframe.”
SMSFs that have a member receiving a pension and a member with a total super balance of $1 million or more are required to report their transfer balance cap events quarterly.
Maroney pointed out that trustees have until Monday 2 July 2018 to lodge their 2016-17 SMSF annual return, which also means this is the deadline for SMSF trustees to make an election for transitional CGT relief as part of the superannuation changes that took effect on 1 July 2017.
“The CGT relief rules allow funds to reset the cost base of assets affected by the introduction of the transfer balance cap and changes to transition to retirement income streams. This is a valuable, one-off opportunity for SMSF members to minimise the impact of the changes on their retirement savings and should not be overlooked,” he said.
Maroney said this financial year is the first year where the lower concessional and non-concessional contribution caps have been in place, and trustees should review their contributions to ensure they are inside the legal limits.
“However, it is also the first year where the ’10 per cent rule’ is removed for personal deductible contributions, meaning all individuals are able to contribute $25,000 in personal contributions and claim a deduction for them rather than only those who were self-employed,” he said.
“These end of financial year issues can be complex and we would encourage any SMSF trustees who are unsure of their entitlements and obligations to seek specialist SMSF advice immediately.”