As the end of the financial year approaches, one mid-tier accountancy firm has warned common and basic compliance issues continue to place SMSF trustees at risk of a breach.
HLB Mann Judd director Andrew Yee told SMSF Adviser it is important SMSF practitioners prompt their clients to withdraw the minimum pension from their SMSF since this continues to be a problem area.
“If they’re not prompted they’ll just forget about it and the consequences are quite drastic,” said Mr Yee.
Given that many SMSF trustees only withdraw their pension once a year towards the end of the financial year, it is often not something closely considered by clients, he said.
“We tell trustees if you’re likely to forget, it may be best to set up a continuous direct debit from your bank account on a monthly basis, at least to meet the minimum pension, then you can readdress it at year end and there’s no danger of breaching the minimum pension rules,” he said.
Mr Yee said SMSF practitioners should also ensure their client is aware they need to have the section 290170 tax deduction notice if they want to make a contribution and claim it as a deduction.
“If they don’t have that, they’re not able to claim the deduction for the contribution,” he said.
“If a person has put the money in assuming they’d be able to claim a tax deduction and then lodges a return and the ATO reviews that return or requests an audit and they’ve come up with no notice, then that’s disallowed."
SMSF trustees should also be careful of mixing up their personal bank account with the account for their SMSF, which is another mistake that occurs often.
This has the potential to breach in-house asset rules, Mr Yee said.
“If it falls within the auditor guidelines, then it will need to be reported,” he warned.
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