With only a few weeks to 30 June, it's worth reviewing your superannuation.  Because super must be contributed by 30 June to be deductible and the Fund has to be compliant as required by the ATO, we have listed key issues that need to be considered.

1. Deductible Contributions

This year, the maximum contributions are $30,000 (under age 49), and $35,000 (age 49 and over).  Those between 65 and 75 must pass the work test (40 hours paid work over 30 days).

From 1 July 2017, the maximum contribution reduces to $25,000.  Consider making the maximum contribution this year where a) the cash is available, b) a deduction for super will save you tax this year, and c) whether you need to get more into you superannuation for your retirement.

2. Non-Deductible Contributions

From 3 May 2016, the lifetime cap on non-concessional contributions is $500,000, including after-tax contributions made since 1 July 2007 (previously allowed $180,000 a year).  If you do plan to top up your super, you first need to know the total of after tax contributions since 1 July 2007.  If less than the $500,000 you can contribute up to that amount.  If you had contributed in excess of this before 3 May 2016, you do not have to withdraw any excess.

3. Super Pensions

Transition to Retirement Income Stream (TTR)

The earnings from funds assets from which a pension is paid are exempt from tax in the fund.  From 1 July 2017 this tax exemption will no longer be available, the fund paying tax at 15%, the same tax rate applicable to a fund in accumulation.

Other Pensions

Ensure the minimum level of pension is drawn (eg., for 65 to 74, the rate is 5% of your member benefit).  If not fully drawn, the pension is treated as a tax free lump sum and the Fund pays tax at 15% on its earnings.

4. Pension Cap

From 1 July 2017, the maximum balance for a Pension will be $1.6 million, the balance remaining in Accumulation.  The Pension balance earnings will be tax free, and the tax rate for Accumulation remains at 15%.

Those members in retirement must transfer any amount above $1.6m to accumulation by 1 July 2017.

5. Borrowing from Members

From 31 January 2017, any loans from members or related parties must be on arm's length terms.

6. Investment Strategy

Trustees of an SMSF are required to review their investment strategy on a regular basis.  The review should include:

- The investments of the Fund, the returns and the investment risks;

- Whether retirement goals have changed;

- Will returns obtained match these retirement goals;

- Are insurance policies required in the Fund, and do they comply.

7. Valuation of Assets (property, Equities, etc)

SMSF's are required to value assets at least at 30 June every year.  This annual valuation does not need to be by an independent external valuer as long as it is based on objective and supportable data, but the ATO considers it is reasonable to have an external valuation at least every 3 years.

8. Role of Trustee

There are several penalties for trustees who breach their duties, eg., make loans to members or relatives, withdrawing super without meeting a condition of retirement, don't meet the 'sole purpose' test, and acquire residential property from a member.  That is one reason why we take extra care with advice and reporting for super funds, use auditors who consider the interests of our clients and are respected and experienced, and send out so much information on super.

So, can you spend a few minutes now to consider your superannuation – tax deduction, topping up the balance in the fund, its investments, and compliance.  If you'd like to go over a concern re super, call us (things can usually be resolved quickly.)