07 Aug Self-Managed Super Fund (SMSF) Update and 2024 Financial Year Planning

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30 JUNE 2024 MINIMUM PENSIONS

Each year, the Government requires SMSF members receiving an income stream (Retirement phase pension) to withdraw at least the minimum pension payment from their super. This is known as the minimum pension drawdown.

The minimum amount you must drawdown from your SMSF depends on your age. It is determined by a set percentage rate and increases as you get older.

The Government first halved this minimum payment requirement in March 2020 in response to

the COVID-19 pandemic. It was introduced to allow pension members to withdraw less of them.

retirement savings, leaving more in their account for later. This was a temporary reduction for the last few years and ceased on 30 June 2023.

The table below summarises the 30 June 2024 Pension drawdown rates.

It is important to note that if your annual withdrawal is less than the minimum, your super pension could lose its tax-free advantages.

VALUATION GUIDELINES OF PROPERTY AND UNLISTED ASSETS

As an SMSF trustee, it is your responsibility to ensure that the assets are valued at market value.

Sufficient, appropriate audit evidence must be provided by SMSF trustees to verify the market valuation, including the method used for valuation and the data relied on. The auditor is required to review the supporting documents, to ensure that the market value is appropriate and consistent with the evidence provided.

With unlisted investments, the asset’s market value is often not readily available.

The following guide is provided to assist you in obtaining the necessary evidence to support the market value of several unlisted assets:

REAL PROPERTY (BOTH RESIDENTIAL AND COMMERCIAL)

  • Trustees should obtain verification of the value for properties.
  • This valuation should be evidenced by an independent appraisal/valuation report for the property. This can be performed by a real estate agent where the value is supported by comparable sales, or a report may be obtained from an independent valuer.
  • If the property is leased to a related party, support for market value rental should also be provided to support the lease value at commencement.
  • A copy of the current lease should be provided.

INVESTMENTS IN UNLISTED TRUSTS AND COMPANIES

  • Provide financial statements for the unlisted unit trust/company for the relevant year.

                                                                                Plus

  • Independent valuations of the underlying assets of the unit trust/company; or
  • A unit/share price based on recent sales between unrelated parties; or
  • For trusts and companies that are not closely held (i.e., more than 20 investors), a written verification of value provided by a trustee of the trust or a director of the company who is not a related party of the SMSF.
  • And where the trust or company have related party dealings, verification of arms-length terms should be provided for those transactions.

PERSONAL PAYMENT OF SUPERANNUATION FUND EXPENSES

The ATO’s preferred approach is that all superannuation fund expenses be paid directly out of the fund itself and for superannuation contributions to be made directly to the fund. This provides clarity because the outgoings of an employer or member of a fund, and the fund must match.

If an SMSF member or related party pays for SMSF expenses, such as annual ASIC fees for a corporate trustee or accounting fees, this may create additional audit queries and ATO scrutiny.