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SMSF Tax Planning Checklist 2014-15

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SMSF Tax Planning Checklist 2014-15

CONTRIBUTIONS

Concessional Contributions Yes No N/A

For members less than 49 years at 1 July 2014

Have you ensured that each member stays within their $30,000 concessional contribution (CC) cap for

2014-15?

Have you checked whether any concessional contributions have been made to any other super

fund on behalf of each member (that would count towards the CC cap)?

It is important that you also check the level of contributions for each member in the prior year who

may have either:

o deferred the timing of June 2014 contributions through the use of an unallocated

contribution holding account (or contribution reserve); or

o had an amount re-allocated to the current financial year (via an objection)

For individuals 49 and over at 1 July 2014

A temporary cap is available for individuals who were 49 and over as at 30 June 2014 allowing for a higher

concessional contribution amount of $35,000 to be contributed for the 2014-15 financial year. This

temporary cap does not index each year.

Have you checked whether any concessional contributions have been made to any other super

fund on behalf of each member (that would count towards the CC cap)?

It is important that you also check the level of contributions for each member in the prior year who

may have either:

o deferred the timing of June 2014 contributions through the use of an unallocated

contribution holding account (or contribution reserve); or

o had an amount re-allocated to the current financial year (via an objection)

ATO key rates and thresholds – contribution

caps

ATO – Concessional contributions

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SMSF Tax Planning Checklist 2014-15

Member deductible contributions

Have you ensured that the individual has sufficient assessable income to claim a tax deduction under

s.290-170 of the ITAA 1997 for the amount contributed into superannuation?

Any amount not eligible to be claimed will carry-over to the non-concessional contribution (NCC)

cap.

ATO – unable to claim income tax deductions as

planned

Where an individual intends on claiming a tax deduction for personal contributions made, have you ensured

that you have met the appropriate timing for when the section 290-170 (ITAA 1997) notice has to be

completed? The following situations can render a notice to be invalid where completed (and dated):

After the fund no longer holds the contribution; and

After an individual has commenced an income stream in whole or with part of the contribution

Notice of intent to claim tax deduction for

personal contributions

Does the member qualify to make further concessional contributions into superannuation using the 10%

rule?

Where the individual is substantially self-employed, where:

Assessable income + RESCs + reportable fringe benefits (RFB)

derived as an employee or carrying on a business

_______________________________________________________________ ≥ 10%

Total assessable income + RESC + RFB

Claiming deductions for personal super

contributions

Para 62, TR 2010/1

Have you ensured sufficient timing to allow for contributions to be cleared before 30 June?

Note that the contribution is reported at the time of receipt by the superannuation fund, not in

accordance with any obligations of the employer (i.e. timing of SGC payments). Very little scope

exists to have the Commissioner to exercise his discretion to have the amount reallocated to a

different income year (see Liwszyc’s case).

Liwszyc v Commissioner of Taxation [2014]

FCA 112 (20 February 2014)

ATO – Timing of contributions

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SMSF Tax Planning Checklist 2014-15

Timing of contribution where member is 65 years or older

Where the member is 65 but less than 75 years at 1 July, have they met the ‘work test’ prior to making the

contribution?

‘Work test’ is defined as 40 hours of completed work within a 30 day consecutive period.

Cannot take prospective work into account – must have completed the work before the

contribution has been made (refer para 21, APRA Circular I.A.1)

Gainful employment is employed or self-employed for gain or reward in any business, trade,

profession, vocation, calling, occupation or employment. Gain or reward envisages receipt of

remuneration such as salary or wages, business income, etc. It must also be tangible (charity

work is generally not considered gainful employment).

ATO – Work Test – 65 to 69 years old

ATO – Work test – 70 years and older

Para 21, APRA Circular I.A.1

Have there been any amounts transferred from reserve (prior year) that may count as a concessional

contribution for the financial year?

This may have occurred as a result of a contribution’s reserving / holding account strategy in

accordance with Commissioner’s views expressed within TD 2013/22 and ATO ID 2012/16.

When reporting the concessional contribution for the current financial year, the amount will be

required to be grossed-up by 1.176 to reflect the actual contribution made in the prior year.

TD 2013/22

ATOID 2012/16

Have there been any other reserve transfers in the current year that would count as a concessional

contribution?

Where the transfer was not made ‘fair and reasonably’ amongst all members of the fund or

relevant class of members and less than 5% of the value of the member’s interest at the time of

allocation.

Reg. 292.25.01, ITAR 1997

ATO – Reserve Allocations

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SMSF Tax Planning Checklist 2014-15

Has the member already breached (or expected to breach) their concessional contribution cap for the

financial year? Have you thought about what options they may have to deal with the excess amount?

Note that the excess concessional contribution amount will automatically be refunded to the

individual and included within their assessable income (plus ECC charge and shortfall interest)

Has any amount been made in error? Need to consider whether the amount is a contribution

made under a mistake of fact or law, as opposed to a contribution made as intended but with

unintended consequences (see ATOID 2010/104)

Can you utilise an unallocated contribution holding account (reserve) for amounts received in June

(TR 2013/22)?

ATO - If you go over the concessional

contributions cap

APRA SPG 270 – Contributions made in error

(para 24)

ATOID 2010/104

Unallocated contribution holding account / reserving

Does the member have an abnormal level of assessable income for the financial year (e.g. capital gain)

and may benefit from utilising this contribution reserving strategy? This effectively allows for a ‘double-dip’

on the tax deduction for the taxpayer in the current income year; for superannuation law, any payment in

June may be allocated up to 28 days after the end of the month in which the contribution is made

(amortising over two financial years for contribution cap purposes).

Maximum tax deduction available for a taxpayer (based on age) is as follows:

An individual less than 49 years at 30 June 2015 is $60,000 ($30,000 + $30,0001)

An individual less than 49 years at 1 July 2014, but was 49 years at 30 June 2015 is $65,000

($30,000 + $35,000)

An individual aged 49 and over at 1 July 2014 but less than 75 (having met the work test above

aged 65) is $70,000 ($35,000 + $35,000)

Important Note:

For Division 293 tax purposes, the entire contribution made in respect of the member during the financial year is included as a low-tax contribution (unless deemed as an excess contribution – to be refunded)

TD 2013/22

ATOID 2012/16

Division 293 tax – information for super funds

1 Amount indexed for FY2015, with no further indexation to apply for 2015-16 income year.

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Have you considered whether to split any concessional contributions?

There is an ability to split up to 85% of any concessional contributions after the income tax year

(i.e. following financial year). This may be beneficial where there is an age discrepancy amongst

fund members (where older member will be able to access funds earlier), or simply to ‘even-up’

account balances to better manage legislative risk.

Note: the member’s spouse must be under preservation age at the time of the split request.

Where the spouse is at preservation age, but less than 65 they can still receive a splittable

contribution on the basis that they have not satisfied the retirement condition. Contributions

cannot be split where the spouse is 65 years or older.

Contributions splitting

Non-concessional contributions

Have you checked whether the member (less than 65) has triggered the “bring forward” rule in either of the

two previous years before making any non-concessional contribution?

Where the bring forward rule has already been triggered prior to 2014-15, you need to ensure that

the member does not contribute any more than $450,000 in the three financial years commencing

in the income year that the member contributed greater than $150,000.

ATO – bring forward provision (under age 65)

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Have you considered the timing of non-concessional contributions for the member leading up to 30 June?

Consider whether it may be more appropriate to contribute $180,000 for the current financial year

before 30 June and then trigger the bring-forward rule by making further contributions from 1 July.

Non-concessional contribution cap has increased to $180,000 for 2014/15 (6 times the

concessional contribution cap – allowing up to $540,000 by applying the bring-forward rule

per individual).

NB. Individuals who have previously triggered the three-year bring forward window (prior to 1 July

2014) do not get any indexation benefit of the contribution caps until this period has expired.

Consider this timing issue for both cash and in-specie asset contributions being made into the

fund, along with the use of the cap for re-contribution strategies (where eligible).

Contribution holding account / reserving strategy could be applied for any non-concessional

contributions in the month of June. However, if the amount is an in-specie contribution, need to

consider:

o whether the asset can be split for the purposes of the SISR 7.08(2)? - .e.g BRP transfer

(single asset) could not be split using the contribution reserving strategy; and

o whether any contribution using this strategy would be within the NCC cap, otherwise it

would be deemed to be fund-capped and any excess amount returned.

Think about the timing issue of making non-concessional contributions for an individual

approaching age 65 (see more below)

ATO key rates and thresholds – contribution

caps

TheDunnThing blog – don’t trip on the

contribution double-dip

Has the member made any contributions that may be fund-capped?

Fund cannot accept fund-capped amounts (SISR 7.04(3), where a single payment is greater than

3 times the NCC cap for an individual under 65 (at 1 July), or 1 times NCC cap for individual 65

but less than 75 years.

o Important to note that member contributions are not aggregated to determine whether

fund-capped. Where total aggregated contributions are more than the NCC cap, excess

amount is subject to excess contribution tax (ECT).

Need to consider whether amounts paid on the same day constitute a single payment (e.g. ATOID

2012/79 – listed share transfers into a SMSF on the same day)

SISR 7.04(3)

ATOID 2008/90 – return of fund capped

contributions

ATOID 2009/29 – return of a contribution after

30 day time limit

ATOID 2012/79 – Operation of Sub-regulation

7.04(3) in context of in-specie contributions

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Has the member had any excess concessional contributions that will count towards the non-concessional

contribution cap (this will occur where the member elects not to release any excess concessional

contribution from the fund)?

If so, what impact (if any) will it have with the member’s existing non-concessional contributions

(i.e. trigger ‘bring forward’ rule?)

NB. Where the member voluntarily elects to release an amount from their superannuation benefit

to pay any amount of their amended assessment (as a result of the excess contributions being refunded), their non-concessional carry-over amount will reduce by 100/85

ATO – Taxation of excess concessional

contributions

TheDunnThing – 7 things to remember with

excess concessional contributions tax reforms

Where a member as at 1 July is 64 years of age (turning or turned 65 during financial year), the member

has ability to contribute up to $540,000 for the current financial year. However, where the contribution is

made after their 65th

birthday, the member must have met a ‘work test’ at any stage during that financial

year to be eligible to make a contribution.

TheDunnThing – triggering the bring forward

rule

Has any member undertaken (or intends to make) an in-specie contribution during the financial year? E.g.

transfer of listed shares or business real property?

Need to ensure that the transaction in undertaken at the current market value of the asset. This

may require a valuation to be obtained by a suitably qualified valuer where a market value isn’t

readily available (e.g. ASX-listed shares).

ATO - Valuation guidelines for SMSFs

ATO ID 2012/79

Are there any amounts transferred from reserve / unallocated contributions holding account to be included

within the non-concessional contribution limit?

Need to ensure that where using a contribution reserve/holding account strategy that any amounts

are not fund-capped.

ATO takes a strict view of interpretation of SISR 7.08(2) with the partial allocation of the value of

an in-specie contribution.

Reg. 292-90.01, ITAR 1997

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Has there been any other amounts that may constitute a contribution in accordance with TR 2010/1,

including:

Paying an amount to a third party on behalf of the super fund (e.g. insurance premiums or fund

expenses)

Forgiving debt owed by the fund (e.g. related party limited recourse borrowing arrangement)

Shifting value to an asset owned by the super fund (e.g. property improvements undertaken by

trustee/member)

TR 2010/1

TheDunnThing blog – related party property

improvements and contributions

Have you considered the timing of starting pensions in light of any non-concessional contributions being

made into the fund?

Where a member has started or is intending to commence an income stream, consider whether to

create multiple superannuation interests – i.e. start pension prior to making contributions, allowing

for the additional non-concessional contributions to create a separate superannuation interest with

a 100% (or very high) tax-free proportion for the pension.

TheDunnThing – multi-pension strategy gains

more power

Division 293 tax

Have you considered the impact of attributing income (e.g. trust distributions/dividends) to individuals that may be subject to Div. 293 tax?

Div. 293 tax will apply where an individual has ‘income’ of greater than $300,000. The definition

of “income” includes taxable income, total reportable fringe benefit amounts, net financial

investment losses, net rental losses, amounts on which a family trust distribution tax has been

paid and super lump sum taxed elements with a zero tax rate.

NB. Consider whether deferral of any amounts of income or superannuation contributions may be

beneficial for the member to stay under the threshold amount for the financial year.

ATO – How Division 293 tax is calculated

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SMSF Tax Planning Checklist 2014-15

Excess non-concessional contributions

Where the member has excess non-concessional contributions from 1 July 2013 and has multiple

superannuation interests as a result of the commencement of an income stream, consider which account you

want to withdraw the excess contribution from

Refund of NCC legislation allows the individual to elect which super interest they want to take the

excess amount from – this doesn’t need to be from the tax-free component (contribution made into

the fund). The member can elect to withdraw the total release amount (excess plus 85% of

earnings) from which ever interest they choose (e.g. account with higher taxable component

balance)

s. 292-415, ITAA 1997

Other contribution considerations

Will the member qualify for the Low Income Super Contribution?

Qualification for this payment is based upon a member having Adjusted Taxable Income (ATI) of

less than $37,000 and having been in receipt of concessional contributions having been made to a

complying super fund

In addition, a minimum earnings test applies as follows:

Assessable income + RESCs + reportable fringe benefits (RFB)

derived as an employee or carrying on a business

_______________________________________________________________ ≥ 10%

Total assessable income + RESC + RFB

The amount payable is the lesser of 15% of the eligible contributions and $500. A minimum amount

payable is $10.

ATO - LISC

Have you considered whether the individual may wish to make a spouse contribution and qualify for an 18%

tax offset on the first $3,000 of non-concessional contributions made on their behalf?

Spouse contribution tax offset

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Has the member considered making a non-concessional contribution into the fund to qualify for the co-

contribution payment ($500 maximum payment)

Changes in the law in respect to co-contributions and applies to all contributions made from 1 July

2012:

ATO – Super co-contribution thresholds

Has the individual (or related entity) made a capital gain during the financial year that may qualify for the

small business concessions, in particular where the amount can be contributed into super using the CGT

cap.

Lifetime cap (2014-15) of $1,355,000, inclusive of Retirement Exemption $500,000

Retirement exemption can be used with in-specie transfer of business real property where the

taxpayer and asset meets the qualifying criteria

NB. ATOID 2010/217 contemplates meeting the retirement exemption with an in-specie

contribution, however it doesn’t contemplate it as a simultaneous contribution. Private Rulings

1011277902229 and 1011296278342 confirm the view that such a disposal to a fund would be able

to meet the contribution requirements under s.152-305 of the ITAA 1997.

ATO – Small Business Concessions

ATO ID 2010/217

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PENSIONS

Benefit payments

Has the member met a condition of release during the financial year?

Does the condition of release have any cashing restriction?

Condition of release with a “nil” cashing restriction includes retirement, attaining age 65, death,

permanent incapacity, termination of gainful employment (for restricted non-preserved benefits),

terminal medical condition, lost member balance that is found with less than $200

Condition of release with a cashing restriction includes attaining preservation age, severe

financial hardship, compassionate grounds, and temporary incapacity.

What documentary evidence has been provided by the member to support the condition of release met to

receive the benefit payment as a lump sum or income stream? E.g. Condition of Release declaration

Schedule 1, SISR

Does the member have a superannuation income stream according to the definition provided by the

Commissioner in TR 2013/5?

Defined as a “liability to pay a series of periodic payments that relate to each other over an

identifiable period of time. The payments do not need to be periodic in the sense that they are

paid at the same, recurring intervals. The payments may also vary in amount.”

TR 2013/5

Have you ensured that the member’s request to commence the pension is prior to the first payment?

May wish to consider within the pension resolutions or contract to acknowledge the member’s initial

oral request at the commencement of a financial year when preparing documentation for the

pension following the completion of the financial statements and member statement.

TR 2013/5

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Have you reviewed the level of pension taken by the member for the financial year? Have the met the

minimum pension?

NB. The previous reduced minimum percentages ceased from 1 July 2013

Age Minimum %

Under 65 4%

65–74 5%

75–79 6%

80–84 7%

85–89 9%

90–94 11%

95 or more 14%

Schedule 7, SISR

With a transition to retirement income stream (TRIS), has the member withdrawn pension amounts within the

4% reduced minimum and 10% maximum for the financial year?

Subject to the start date, the minimum pension will be pro-rated for the financial year, unless

commenced after 1 June where no minimum pension is required

Regardless of the start date of a TRIS, a flat 10% maximum rate applies (i.e. no pro-rata maximum

is required)

SISR 6.01

ATO – SMSF Transition to Retirement Income

Streams

Does the member have more than one income stream?

Have you considered how you may allocate the pension withdrawals for the financial year? Each

pension account must have the minimum pension withdrawn, but consider how you may apply

above minimum amounts, in particular where the member may have an income stream with a very

high tax-free proportion.

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Have you reviewed the level of pension the member(s) intend to take for the financial year?

More than the minimum? Where multiple pensions exist, consider where the member may be best

suited to applying the ‘above minimum’ amounts.

o This may be from the higher tax-free proportion pension under 60 (less assessable

income), or

o May be from the higher taxable proportion income stream where 60 and over to preserve

the tax-free benefits for estate planning purposes.

Don’t need to take the minimum? Consider whether to take the minimum payment (or remaining

amount to minimum) as a partial commutation lump sum. This would allow for benefits to be paid in

cash or in-specie, where the lump sum would count towards the minimum pension limit for that

income year.

TR 2013/5

SMSFD 2013/2

SMSFD 2014/1

Where the member may have failed to take the minimum pension for the financial year, consider whether the

income stream may be able to continue to exist by applying the Commissioner’s general powers of

administration (GPA concession).

A small underpayment is considered to be an amount that does not exceed 1/12th of the minimum

pension payment in the relevant income year.

ATO – small underpayment of SMSF

pension

TheDunnThing - Falling short on your pension

payments

Does the member wish to transfer an asset as part of their pension obligations for the financial year?

Lump Sum payments can be made by cash or in-specie, however payments cannot be made in-

specie where the payment is in respect of a pension (see paragraph 62, SPG_280)

Consider using a partial commutation lump sum payment should a member wish to make an in-

specie benefit payment (see SMSFD 2013/2 and SMSFD 2014/1)

Para 62, APRA SPG_280 Payment standards

for regulated Super Funds

TR 2013/5

SMSFD 2013/2

SMSFD 2014/1

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Does the transition to retirement income stream contain any unrestricted non-preserved benefits? If so, you

must first draw down benefits from the unpreserved amounts, then restricted non-preserved, then preserved

amounts (priority of cashing).

Consider rolling back pension and creating two pensions, one with any preserved and restricted

non-preserved component (TRIS) and one pension with unrestricted non-preserved component.

This amount will be treated as an Account Based Pension (ABP), not TRIS due to unpreserved

nature of superannuation components.

Where unpreserved monies are within TRIS, all fund earnings are applied to preserved benefits.

Where the unpreserved monies are within a separate pension, earnings are applied to unrestricted

non-preserved component.

SMSFD 2014/1 contemplates the ability for a member to commute a transition to retirement income

stream (TRIS) to lump sum any unrestricted non-preserved benefits. Any lump sum amount will

count towards the minimum pension for the income year, but not the maximum amount.

SISR, 6.22A

SMSFD 2014/1

Exempt Current Pension Income (ECPI)

Have you considered whether it may be appropriate to set aside specific assets to support the payment of

one or more income streams (i.e. segregation)? This may be beneficial where:

Members have different risk profiles

Different ages of members (e.g. includes parents/children within the same fund)

Segregate specific asset(s) to different superannuation interests of a member (e.g. where the

member has a pension account and accumulation, or where they have two income streams with

different levels of tax-free component). You may look to assign specific assets to accelerate the

balance of the income stream with a higher tax-free proportion? This would improve the tax-

effectiveness of an assessable transition to retirement income stream.

TheDunnThing – having your SMSF capitalise

on a market recovery

TD 2014/7

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Where segregation has been applied, have you set aside assets ‘solely’ to enable the fund to discharge its

pension liabilities?

The ATO issued a draft ruling on segregation (subsequently withdraw for further consultation) which

raised the view that the Commissioner expects total segregation of an asset (e.g. entire property,

not share of direct property segregated to the pension account).

Where segregation occurs, a separate bank account should be established to receive income and

pay expenses attributable to the segregated assets.

Consider how you would structure the bank accounts for the purposes of segregation. Whilst TD

2014/7 allows for sub-accounts to operate within an SMSF, it is noted that this is practically difficult

to achieve and administratively burdensome.

TD 2013/D7 (withdrawn)

TheDunnThing – to segregate or aggregate

TheDunnThing – ATO withdraws draft tax

determination on pension segregation

TD 2014/7

If a fund is entirely in pension phase? Does it have any capital losses for the financial year?

Consider whether it would be better to have a segregated or unsegregated asset approach for the

financial year based on whether the capital loss can be carried forward

Where fund’s assets are unsegregated, section 102-5 of ITAA 1997 allow for capital losses to be

carried forward. Were segregated, all gains and losses are simply disregarded (see s.118-300 of

ITAA 1997)

TheDunnThing – how a $1 accumulation

account could allow you to carry forward a

$100,000 capital loss

LIMITED RECOURSE BORROWING ARRANGEMENTS

Entering into an LRBA

Have you considered the timing of entering into an acquisition of property using a limited recourse borrowing arrangement given the recommendation by the FSI panel to Government to ban the use of leverage within superannuation?

FSI Panel recommendation – direct borrowing

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Related party borrowing - have you considered the rate of interest and the other terms and conditions that

are being imposed on the loan in entering into the arrangement? The following items may be considered by

the ATO to be not dealing at “arm’s length” and therefore lead to the fund’s income being subject to the Non-

Arm’s Length Income (NALI) provisions:

Loan-to-Value Ratio (LVR)

Term of the loan

Interest Rate

Repayment Schedule

No personal guarantees

ATOID 2014/39

ATOID 2014/40

Refinancing & redraw

Have the trustees considered refinancing their existing SMSF loan? Trustee may consider refinancing to

obtain a better deal, change an existing arrangement from a related party loan to bank loan or vice versa.

Section 67A(1)(ii) allows for money to be applied to refinance a borrowing, however not all banks

policies will allow for a refinance – you should check what terms (if any) a lender will impose to

refinance a SMSF loan.

s.67A(1)(ii)

Is the trustee looking to redraw on the SMSF loan to undertake allowable repairs and maintenance?

Need to consider the original terms & conditions of the loan as to whether it a redraw may be

allowable

ATO – LRBA refinancing and redraws

ATO – Extension of borrowing

Property improvements

Is the trustee looking to undertake property improvements whilst the limited recourse loan is in existence? If

so, have you ensured that:

Improvements are only made with the fund’s own resources (e.g. cash, insurance proceeds)

The improvements do not create a different asset

SMSFR 2012/1

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Where a fund member may wish to undertake improvements themselves, have you considered whether the improvements may constitute a contribution?

In addition, you will also need to consider how the materials were acquired (i.e. by fund or by

member) for the purposes of the related party acquisition rules

Repayment of SMSF loan

Has the trustee now repaid (or is about to repay) the SMSF loan?

NB. A new legislative instrument (currently draft) aims to provide certainty with the application of the in-house

asset exemption as part of limited recourse borrowing arrangements where:

at the beginning of an LRBA where a borrowing referred to in paragraph 71(8)(b) of the SIS Act has

not yet begun or the related trust does not yet hold the acquirable asset

where the asset continues to be held in the related trust after the borrowing referred to in paragraph

71(8)(b) of the SIS Act has been repaid.

ATO – Legislative instrument LRBAs

Where the loan has been repaid, is the asset going to become a different asset (e.g. by way of

improvement)?

If yes, the asset will be required to move from the bare trustee to the SMSF trustee

If no, the asset can continue to be held by the bare trustee on behalf of the SMSF without breaching

the in-house asset rules

OTHER

Investment Strategy

Does the fund’s investment strategy include details that the Trustees have considered whether a contract of

insurance is appropriate for one or more members?

Have you ensured that the Trustees are regularly reviewing the fund’s investment strategy, including the preparation of trustee minutes supporting the regular review?

SISR 4.09

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SMSF Tax Planning Checklist 2014-15

Insurance

Have you ensured that any insurance arrangements entered into from 1 July 2014 are aligned to a condition of release outlined within Schedule 1 of the SIS Regulations 1994?

Note that any existing arrangements in place prior to 1 July 2014 are grandfathered and can

continue to exist – this includes insurance for trauma cover and cross-insurance arrangements

(typically established with LRBA arrangements)

Schedule 1, SISR

ATO – SMSF insurance for members

ATO – Q&A – Cross-insurance

Collectibles & Personal Use Assets

With the transitional period for pre-existing collectables and personal use assets ceasing at 30 June 2016, have you started to discuss with existing fund trustees about how they intend to comply with SISR 13.18AA?

This may require the trustees to consider:

Use and existing lease arrangements with related parties

Storage, including where the asset is currently stored in a private residence

Insurance of the asset in the fund’s name

Appropriately documenting any of these trustee decisions

Section 62A, SISA

SISR 13.18AA

If the asset is to be sold or paid to the member as a benefit payment (where condition of release has been met), has the fund obtained an independent valuation to demonstrate the market value of the fund asset?

SISR 13.18AA

Residency

Where a member has departed Australia (temporary or permanent), have you considered the relevant issues around the fund’s residency?

Have you checked that Central Management & Control (CM&C) still resides in Australia?

Does the fund have either no active members or have active members who are Australian residents

and who hold at least 50% of:

o The total market value of your fund’s assets attributable to super interests, or

o The sum of the amounts that would be payable to active members if they decided to leave

the fund

ATO – Check the residency of your fund

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SMSF Tax Planning Checklist 2014-15

Market valuations

Are the fund’s assets recorded at the market value?

Stronger Super reforms effective for the 2013-14 financial year will require trustees to value the

fund’s assets at market value when preparing the financial statements. Previously trustees could

use a market or historical valuation.

Refer to ATO valuation guidelines document for assistance in determining market valuation for fund

assets

ATO – Valuing the assets of a fund at market

value

Death Benefit Nominations

Do the members have in place a valid death benefit nomination (DBN)?

Non-binding (discretionary) DBN

Binding DBN (with renewal period – e.g. 3 years)

Binding non-lapsing DBN

SMSF Will / Death Benefit Rule

Important Note: In light of recent decisions in Munro, Ioppolo and Wooster’s cases, it is critical that a regular

review of a member’s death benefit nominations occurs to ensure the instructions of the deceased member can be provided.

Munro v Munro [2015] QSC 61

Ioppolo v Conti [2015] WASCA 45

Wooster v Morris [2013] VSC 594

Have you reviewed the renewal date for a binding DBN? Does it require the member to update an existing

binding DBN?

Consider whether it may be appropriate to update to a non-lapsing binding DBN? This may require

the fund’s trust deed to be updated to allow for a binding DBN to be non-lapsing.

SMSFD 2008/3

Does the member have in place Enduring Powers of Attorney to deal with financial and medical issues?

Section 17A, SISA (Definition of SMSF) allows for certain other persons to be trustees in place of

the member, where the legal personal representative (LPR) has an enduring power of attorney in

respect to the fund member.

Section 17A(3), SIS Act

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SMSF Tax Planning Checklist 2014-15

Trust Deed

Have you reviewed the fund’s trust deed to ensure that it allows for the SMSF to undertake strategies that

may be relevant to the fund members? When was the fund’s trust deed last reviewed?

Consider updating the trust deed to deal with issues such as limited recourse borrowing, pensions,

non-lapsing death benefit nominations or SMSF Wills, the payment of death benefits, fund

reserving, payment of income streams, etc.

Where the trust deed requires review, do you undertake a whole of replacement of the existing

clauses within the existing deed or do you simply change/add addition clauses to the governing

rules? This may be relevant subject to any previous tailoring of the trust deed or where an existing

defined benefit income stream may be in place (established prior to 1 January 2006).

The SMSF Tax Planning checklist is not an exhaustive list of the issues and opportunities to explore with fund trustees.

Advice Disclaimer This checklist and information contained within is general in nature and does not take into consideration any personal circumstance, financial needs and objectives of an individual. Before

acting on any information within this checklist, the user should consider the appropriateness of it and the relevant financial product having regard to the individual’s objective, financial

situation and needs.

The SMSF Academy Pty Ltd disclaims all and any guarantees, undertakings and warranties, expressed or implied, and shall not be liable for any loss or damage whatsoever (including

human or computer error, negligent or otherwise, by one or more of the authorities, or incidental or consequential loss or damage) arising out of or in connection with any use or reliance on

the information or advice of this checklist. The user must accept sole responsibility associated with the use of the material within this checklist, irrespective of the purpose for which such use

or results are applied. The information contained within this checklist is based on the SMSF Academy’s interpretation of the relevant laws at the time of its preparation. It is not a substitute

for any user from undertaking their own research and planning on the specific issues contained within this checklist.

Additional checklist items

Should you have any additional items that you think would add to the existing checklist, please feel free to email info@thesmsfacademy.com.au to continue to build on this SMSF tax planning

document.

Additional references

TheDunnThing blog – http://thedunnthing.com

The SMSF Academy – http://www.thesmsfacademy.com.au

Australian Taxation Office – http://www.ato.gov.au/smsf