The countdown is on to EOFY so let’s summarise some key considerations for those with SMSFs as June 30 approaches.
Contributions
Cash contributions will only be recognised when received by the fund – not when it is made. A timely reminder when this occurs near June 30. Some funds have a cut off date mid-month so funds can be allocated in the same financial year. Contributions after the cut-off date cannot be guaranteed.
With 30 June falling on a Sunday this year, no doubt some will be caught out. Any contributions received on 1 July 2024, will belong to the 2024-25 financial year.
If you are using the ATO’s Small Business Superannuation Clearing House, it’s a good time to check the bank details of your SMSF are up to date and correctly recorded by the ATO. As if not, payments may be rejected. Additionally, any last-minute super payments by employers to top up employee’s super may not reach the fund in time to be recorded as a contribution in 2023-24. It may be held over until 2024-25 financial year.
The best message here is to not leave any payments until the last minute! Ensure all payments are made well and truly ahead of June 30 to ensure they are recorded as a 2023-24 contribution.
In regards to preserving concessional payments, the concessional cap for the 2024-25 financial year is set to increase from $27,500 to $30,000 from 1 July 2024. We advise that any contribution intended to be ‘reserved’ and allocated at a later date be made separately from any other contributions not intended to be ‘reserved’.
Also important to note, this 2023-24 financial year is the last year that any unused concessional contributions carried forward from the 2018-19 financial year may be utilised.
Pensions
Similar to contributions, for a pension payment to be recognised in the 2023-24 financial year it must leave the superannuation fund’s bank account no later than 30 June 2024. Otherwise it may result in the SMSF not being able to claim exempt current pension income (ECPI) in respect to retirement phase pensions.
In relation to pensions in retirement phase, where a member may exceed their minimum requirements, they may consider whether to treat any additional payments as pension payments or a partial commutation. All SMSFs required to report transfer balance account events from 1 July 2023 must do so on at least a quarterly basis. Members looking to commence a pension in June 2024, will not have a minimum pension requirement for the 2023-24 year.
Asset valuation
Assets of a fund are required to be recorded at their 30 June market value in each set of annual financial statements.
Depending on your fund’s assets, as a trustee, you may soon need to turn your attention to how you will determine the value of fund assets and substantiate such values. You may expect close scrutiny from SMSF auditors this year and potentially from the ATO.
Audit concerns
Now is the time to review your auditor’s management letter and audit report for the previous financial year to ensure all issues or concerns have been dealt with prior to the audit of the 2023-24 financial statements. Failure to rectify can lead to a contravention report being lodged with the ATO and penalties applied.
With June 30 just around the corner, feel free to reach out to ensure your SMSF is in order for 2023-24 financial year. We are here to help! Contact the team to make an appointment.
