5 crucial superannuation updates you may have missed

5 crucial superannuation updates you may have missed (1)

ATO alerts

Since February 2021, the Australian Taxation Office (ATO) has issued alerts to Self-Managed Superannuation Fund (SMSF) trustees via email and SMS when changes are made to the SMSF’s records held with the ATO, including:

  • Financial institution account details
  • Electronic service address
  • Authorised contacts
  • Members.

With this, the ATO has not specified what has been changed for SMSF records.

Please note to exercise caution when opening alleged ATO correspondence via SMS. We are in the age of scams and if you are uncertain about the legitimacy of a message, contact your accountant or the ATO directly. This article details 5 things you need to look out for that have changed with superannuation.

 

1. SMSF audits

SMSF auditors have been publicised quite heavily in the media recently considering the new and updated independence guidelines issued by the Accounting Professional & Ethical Standards Board (APESB) about how SMSF audits must be conducted.

SMSFs must be audited each year, and the auditor must be independent from both the fund and the accountant or administrator who prepares the financial statements. Many service providers have historically conducted accounting and audit services within the same firm, ensuring separate service lines and Partners are responsible for each function. This has been abruptly ended, with conflict of interest being quite prevalent in some instances.

SMSFs are required, by law, to be audited annually and the SMSF Annual Return cannot be lodged with the ATO until the audit is complete.

 

2. Contributions

The concessional contributions cap has increased from $25,000 to $27,500 from 1 July 2021, which means the non-concessional contributions cap will rise to $110,000 and the maximum two-year bring-forward amount will increase to $330,000.

Non-concessional contributions means contributions with your after tax dollars. Concessional means that they are from your gross pay.

 

3. Work Test

Individuals under the age of 67 are eligible to make voluntary superannuation contributions without needing to meet the Work Test. This is an increase to the previous requirement of needing to be under the age of 65 and is designed to progressively align the Work Test with the eligibility age for the age pension.

Please contact us if you wish to find out more about what the work test entails.

 

4. Minimum pension drawdown requirements

For the year ending 30 June 2021, the Federal Government has reduced the minimum pension drawdown requirements substantially. This lowered pension drawdown is aimed at helping preserve the capital in an individual’s retirement savings and avoid crystallising potential capital losses.

Age at 1 July*Minimum pension percentage factor for the years ending 30 June 2020 and 30 June 2021
>652%
65-742.5%
75-793%
80-843.5%
85-894.5%
90-945.5%
95 or more7%

Please note that that the fund’s assets should be at market value and the minimum drawdown should be paid in cash from the fund’s bank account before 30 June 2021.

 

5. Property valuations

SMSF trustees that own property either directly or via a unit trust structure should consider if the value of the property has been impacted by all the events in 2020 (including bushfires, floods and the COVID-19 pandemic).

Now is perfect timing to get an independent valuation or appraisal if your fund has an interest in real property.

 

There are a lot of things to consider here, especially when you are assessing whether you meet the work test or if you are eligible to make non-concessional contributions. It’s extremely important to contact an accountant like Link Advisors and a Financial Planner to ensure that your SMSF is compliant and contains up to date valuations.