SMSF Updates

SMSF updates: lodging on time, valuing assets, investment strategy, scams

With the end of the financial year come and gone, and with SMSFs in the process of doing (or at least contemplating) their end of year financial accounts, the ATO have recently alerted SMSFs to a number of reminders, as follows:

Lodging on time

If your SMSF is newly established of if any of your previous year’s lodgements have been missed, then your annual return for 2020-21 was due by the 31st October. Having said that, if you have a newly established fund and your SMSF annual return is being lodged via a tax agent, then it is not yet due. Importantly, if a SMSF’s annual return is more than two weeks overdue (and the ATO have not been contacted) then the status of the fund will be changed to ‘regulation details removed’, and will remain that way until overdue lodgements are brought up to date. That change of status will mean other super funds will not be able to roll over members balances and employers will not be able to make super contributions (such as SGC) for your SMSF members.

Investment Strategy

Following on from the above, the ATO have reminded SMSF trustees that their fund’s investment strategy is not “set and forget”. It is a strategy document that needs to be regularly reviewed. So what does “regularly” mean? This means at least annually when the SMSF return is done, but the ATO state that it could also include when the following occurs:

  • a market correction has occurred
  • a new member joins or departs the fund
  • a member commences receiving a pension. This is to ensure the fund has sufficient liquid assets and cash flow to meet minimum pension payments prior to 30 June each year.

They also have reminded SMSF trustees that they can invest in any type of assets if they:

  • are allowed by your funds trust deed
  • not prohibited by super laws
  • meet the sole purpose test.

and that your SMSF auditor will check to see if your SMSF has met the investment strategy requirements under the super laws.

Valuing your SMSF assets

As part of your SMSF lodgement, it will be important that asset valuations are completed properly. For those investing in listed assets that have a quoted price – such as shares and ETFs listed on the ASX, or managed funds with a unit price – then this is quite easy. However, for other assets such as property or collectables, this is not so straight forward. The resolution of “market value” is key here, and the ATO point out that :

“Market value is the amount a willing buyer of the asset could reasonably be expected to pay to acquire the asset from a willing seller if all the following apply:

  • the buyer and seller dealt with each other at arm’s length in relation to the sale
  • the sale occurred after proper marketing of the asset
  • the buyer and seller acted knowledgeably and prudently in relation to the sale.”

They also state that “you must obtain objective and supportable data to support the market value of each fund asset“, and to “consider using a qualified independent valuer if the value of a fund asset represents a significant proportion of the fund’s value or the nature of the asset indicates that the valuation is likely to be complex or difficult.”

Scams

The ATO recently put out an alert about a new scam doing the rounds. It was an email which asked recipients to click on a link to update their details. Of course, it was a fake and it was all in aid of stealing personal information.  The ATO are clear that they will never send you and SMS of an email to ask you to update your details via a link. They are also explicit in that they will never:

  • threaten you with immediate arrest
  • cancel your TFN
  • send unsolicited pre-recorded messages to your phone
  • keep you on the phone until a payment is made
  • request payment via unusual methods, like cryptocurrency, gift cards or cardless cash.

Please commit these to memory in case you receive one of these bogus calls. Don’t become a victim.

 

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