With the 2021 financial year winding to a close, now is the best time to ensure your SMSF has met all it’s annual obligations.
Meeting new pension requirements
As was the case in the 2020 financial year, the Government has reduced the minimum drawdown requirements by half for pensions due to the impact of COVID-19 on the financial markets.
Even though the minimum amount has been reduced, if you do not meet the minimum drawdown amount your SMSF will be subject to 15% tax on pension investments instead of being tax free.
To confirm how much you need to withdraw, as well as confirm the amount of pension already paid, please give us a call.
For the 2021 financial year, the non-concessional (after-tax) contributions are limited to $100,000 and concessional (before-tax) contributions are limited to $25,000. However there are a few extra options available – especially if you are needing some tax planning options!
Any amount you contribute under the concessional contribution cap is able to be claimed as a personal tax deduction meaning not only is your SMSF growing for your future, but you can also receive a present day reward as well!
Furthermore, if you have less than $500,000 in superannuation and have not contributed your maximum concessional contributions in previous years, you are able to contribute the unused amount in this year. For example, if you only contributed $10,000 of concessional contributions in the 2020 financial year, you could contribute $40,000 before 30 June 2021 without exceeding your cap. This means you can receive a personal tax deduction for $40,000 rather than $25,000.
For non-concessional contributions, if you are under 65 and have less than $1.4 million in superannuation, you are able to utilise the “bring forward rule” and contribute up to three years’ worth or contributions in one year – meaning the total you can contribute is $300,000.
Contribution caps are being indexed from 1 July 2021. This means the concessional contribution cap will rise to $27,500 and the non-concessional cap will increase to $110,000. If you are looking at making any large contributions, it may in fact be best to wait until the new financial year!
If your SMSF owns property, either directly or with a limited recourse borrowing arrangement (LRBA), there are new considerations. Many properties did not receive full rent payments under their lease agreements because of COVID-19 concessions. For LRBA properties, you may also have received a concession in mortgage repayments.
If you did have an agreement with your tenant or lender you will need to ensure you have all the documentation for the auditor to show any concessions were in line with ATO guidance and not in potential breach regulations.
It may also be a good time to arrange a market appraisal for the property value and review the rental agreement to ensure it is all at appropriate market value.
Annual Fund documentation
So we can complete the financial statements, tax return and any other required compliance documents, you will still need to provide us with the SMSF’s bank statements, annual investment statements and annual rental statements.
If you have any questions about your SMSF, please contact us.