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Self-managed super fund mistakes to avoid for EOFY

Posted on 1 June '15 by , under General News.

It is important for investors to have a good understanding of their SMSF to help reduce tax bills and maximise their wealth. To avoid being issued an SMSF audit by the ATO, investors should take the following advice on board:

– Read the trust deed to gain a better understanding of how the fund works.

– Have a regularly revised investment strategy, which takes into consideration liquidity, risk and return, diversification, meeting liabilities and insurance.

– Update binding death nominations to ensure that trustees pay the income and capital of the trust to intended beneficiaries.

– Utilise the transition-to-retirement pension if you’re still working and aged between 55 to 64. Any assets invested in a pension are free from capital gains tax and earnings tax. Also, investors will be able to reduce their mortgage and increase their tax-free contributions.

– Optimise contributions into the SMSF. Investors who turned 49 on June 30 last year are eligible to invest $35,000 into their fund and claim a deduction. The contribution limit remains $30,000 under that age. Self-employed members can contribute a lump sum, but if they are employed under a salary arrangement, they must have salary sacrificed that amount during the year.

– Submit SMSF tax returns on time.