New Year’s resolutions for your SMSF

“Lots of advisers are receiving 30 June 2023 financial statements now and it’s important to remember that many contribution rules depend on balance at 30 June so now is the time to start talking to clients about bring forward, catch up concessionals,” she said.

“Remember everyone can claim a tax deduction for contributions these days so a holiday bonus doesn’t have to be salary sacrificed, it could be contributed later in the year and a tax deduction claimed.”

Other strategies can be put in place now to make sure an SMSF delivers the best outcomes for its members including changing the structure of an SMSF from individual trustees to a corporate framework.

“No one likes extra costs and it will cost money to set up a company and there will also be ongoing fees to ASIC, but a corporate trustee is better in every way, especially when a member dies,” she said.

Although when this happens, the remaining trustee may be intending to wind up the SMSF, the administrative burden can be overwhelming on top of the requirement of selling assets and paying out benefits.

“In practice, banks and other financial institutions will often prevent access to the fund’s cash and investments until the fund has a trustee structure they recognise as normal and a single individual trustee won’t compute,” Ms Heffron said.

Another thing to consider coming into a new year is whether the SMSF member has an enduring power of attorney.

“The SMSF rules have special safeguards that allow someone who holds an enduring power of attorney for a member to be a trustee or director of the corporate trustee of the fund on behalf of the donor,” she said.

“This is one of the very unusual situations where someone can be a member of the fund but not also a trustee. It can be critical in making sure the SMSF continues if something happens to the donor (member) and they can’t be a trustee any more but still have money in the fund.”

Christmas and New Year may not be the ideal time to think about death benefit nominations, but they are one of the most important aspects of an SMSF.

“Bear in mind, for example, that a validly completed binding death benefit nomination is – true to label – binding. It means your super will be dealt with exactly as you’ve stated even if that’s not the best approach for your family,” Ms Heffron said.

She said it can be a more tax-effective strategy to take a spouse’s super as a pension with super rather than have a blanket binding nomination to the estate.

“Other ways to make a BDBN work better is to leave super for adult children who generally pay tax on a parent’s super via the estate as estates don’t pay Medicare while individuals do,” she said.

Now is also the perfect time to review the fund’s investment strategy documentation and ensure that everything is correctly documented.

Fatuma Akalo, SMSF specialist at Wattle Partners, said the new year is a good time to look at SMSF investment strategies and make sure they are in alignment with the members’ goals, needs and objectives.

“For example, does the investment strategy for the SMSF produce the right level of income and capital to sustain your long-term retirement income needs? A lot has changed in markets in the last 12 months, so Christmas is as good a time as ever to reset,” Ms Akalo said.

“Additionally, if the fund still holds personal insurance such as life, TPD or income protection it is best to see if that is still relevant to the members’ circumstances.”

She said the Christmas and New Year period is a good time to reflect on the last 12 months and think about the next 12.

“Think about what it will bring for you and your family as you generally have more free time during the festive season to reflect,” she said.

“We know there are a lot of conversations around money, whether stock tips or ETFs, however, it’s important to ensure this all fits into your overall strategy and not seek to profit from rumours.”