Important checklist items for reviewing SMSFs

“This will also help the trustees identify and manage any obligations they have for the rest of the year and ensure they can be met,” Mr La Greca said.

One of the best places to start, said Mr La Greca, is the SMSF’s operating bank account, as this should be where all the cash transactions went through.

Mr La Greca noted that SMSF bank accounts allow only four types of deposits, including contributions, rollovers, investment income, and proceeds from the disposal of an asset.

“For [contributions], the supporting material will depend on who made the contributions. If an employer made it, the information would most likely have been provided electronically via SuperStream unless the employer is related to the SMSF,” said Mr La Greca.

“For personal contributions, there will need to be a notice from the individual advising the SMSF what type of contributions was made and if it is made for another person.”

In terms of rollovers, Mr La Greca said the SMSF should have received a superannuation rollover statement unless the rollover occurred after September 2021, in which case the information will be provided electronically via SuperStream.

The paperwork for investment income will vary depending on the source of the investment income, he said.

“For share dividends, you should have a dividend notice including franking credit details if applicable; interest payments should come with a letter specifying the period of the interest, or you should provide a schedule with amounts and dates of interest payments,” he noted.

“For property, it will depend on whether or not you have an agent managing it for you. You may receive a net rental amount, and your agent will provide you with a rental statement outlining the gross rental received as well as any ongoing expenses paid on your behalf.”

For proceeds from the disposal of an asset, the SMSF trustee should have a contract for sale it will specify the amount to be received on disposal and the purchaser’s details and timing of the payment, he said.

SMSF trustees may then want to look at withdrawals from their account, he said, which include expenses, lump-sum benefit payments, pension payments and purchases of investments.

“Invoices should be provided for each expense [outlining] which service was provided to the SMSF, or there may be a service agreement that will outline regular expense charges such as ongoing administration or advice fees,” he noted.

In terms of lump-sum benefit payments, there should be evidence of the member requesting the trustees to make the payment.

“This may simply be a letter from the member to the trustee but may also require statements confirming the member has satisfied the appropriate condition of release to let the SMSF make the payment,” he said.

“For [pension] payments, the obligations are very similar to those for lump sums when commencing a new pension. For ongoing payments, the instructions from the member requesting a particular payment will be needed if there is not a periodic payment set up.”

Purchases of investments will require a contract document outlining the asset being acquired, the vendor name, the date of acquisition and the purchase price.

The other key documents to check is the last set of financial statements containing the investment summary and member account details, said Mr La Greca.

“The investment summary will let the trustees identify all the existing assets are still assets of the fund as no contract for sale has been done for these assets. Additionally, having examined the transactions, it will assist the trustees in confirming whether an income is outstanding for the period from these assets,” he said.

“Reviewing the member account summary will help the trustees identify the status of each member balance. It will also allow a check to ensure that any contributions or rollover received have been for existing members. If this is not the case, either that contribution should be returned, or a new member and potentially trustee need to be added to the SMSF.”

A similar check can also be done in respect of benefit payments, said Mr La Greca.

“You [can] cross-reference to ensure the member is in the appropriate accumulation or pension phase. More importantly, the likelihood that there is sufficient benefit in the member account to cover the benefit payment amount,” he said.

SMSF trustees should also review the pension paid to date and compare it with the required minimum annual payment level for pension members, he said.

“If the minimum has not been met, it will remind the trustees of the cash flow obligation that must be met in the next six months.”