1.    Take stock of your SMSF investment return and fees

After the financial year, it’s time to take review of your SMSF investment returns and fees. Assess how your assets performed and determine if your returns were in line with your expectations.

Note that based on returns up to the March Quarter, superannuation fund returns will be lower than previous years due to a challenging first half of the 2018/19 financial year. However, most balanced fund options will still deliver positive growth above inflation.

When assessing your SMSF’s performance it must be remembered that analysis must look further than merely comparing returns with other funds and look towards your retirement goals and income needs. It is entirely appropriate for an SMSF member to aim for a level of retirement income that allows them to meet all their financial goals and lead a comfortable lifestyle achieved through lower investment returns than what other superannuation funds achieve.

It is also important to review the expenses in your SMSF each year. This includes administration, investment, advice, insurance premiums and any other superannuation fees and charges. Take stock of your superannuation balance and determine if your current fees are appropriate for your SMSF and ensure you are getting the most value for money.

2.    Assess your asset allocation and investment strategy

An important requirement for you as trustee of your SMSF is to have an investment objective and a strategy in place to achieve that objective. The new financial year is a good time to review that objective and strategy.

Whatever assets you choose to invest your SMSF in, there must be a clear and demonstrable retirement purpose in the choices you make. Of equal importance is that the investment objective and strategy is not set in stone. Trustees can choose to change the investment objectives they have set for their SMSF at any time.

A key aspect of an investment strategy is to consider the diversification of your SMSF’s assets.  Diversification of your retirement savings across different assets and markets is a key in protecting your fund from volatile financial markets over the long-term.

The benefits of a well-diversified portfolio are numerous but the key ones that SMSF trustees should focus on are the benefits of mitigating volatility and short-term downside investment risks, preserving capital and the long-run benefits of higher overall returns. By spreading an SMSF’s investments across different asset classes and markets offering different risks and returns, SMSFs can better position themselves for a secure retirement.

3.    Review your Total Superannuation Balance at 30 June 2019

It’s also important to review your total superannuation balance (TSB) at the beginning of the financial year. Your TSB assesses your eligibility to take up certain superannuation measures.

Currently, the following different TSB thresholds apply and you must have:

• $300,000 or less for work-test exemption contributions.
• $500,000 or less for catch-up contributions.
• $1,000,000 or more threshold for quarterly transfer balance cap reporting.
• $1.4 million, $1.5 million and $1.6 million TSB limits for bring forward non-concessional contributions.
• $1.6 million or less to make non-concessional, spousal and co-contribution.
• $1.6 million or less to use segregated pension assets for exempt income.

4.    Take note of your contribution caps for the financial year and access to certain contribution measures

Assessing your contribution caps for the year is also essential to any SMSF strategy and planning. The current concessional contribution (pre-tax) limit is $25,000 for the 2019/20 year.

The current non-concessional (post-tax) limit is $100,000 for the 2019/20 year. Individuals are able to bring forward the following two years contributions and contribute three times the annual non-concessional cap at once if they have a TSB lower than $1.4 million.

It is also important to review the age requirements and any need to meet the work test for any contributions you wish to make.

Individuals 65 years old or older and who meet the eligibility requirements, may be able to choose to make a downsizer contribution into their superannuation of up to $300,000 from the proceeds of selling their home.

From 1 July 2019, individuals will be also be able to make their first catch up contribution for any unused amount of concessional cap space not used in previous financial year.

5.    Assess your retirement plan and any commencement of pensions and their balances

If you are approaching retirement or have retired, take the time to review your retirement plan. This includes assessing if you wish to commence a pension because you reached a condition of release. The main condition of releases that ensure you can withdraw on your superannuation are turning 65 or reaching your preservation and retiring.

If you have a pension, take stock of the starting pension balance for the financial year and review your transfer balance cap.

Each year you must also withdrawal a minimum amount from your pension account depending on your age. Ensure you have the liquidity and withdraw this money within the financial year to keep your SMSF pension asset income tax free.

6.    Check your estate plan

Estate planning is ensuring members have control over where their assets will go after they pass away. Therefore, it is important in the creation of an estate plan that each of the documents in an SMSF document chain link up correctly. Any weak link has the potential to destroy the entire estate plan. 

So what should form part of a comprehensive SMSF estate plan? At a minimum it should contain:

• An up-to-date will
• An up-to-date enduring power of attorney
• An up-to-date enduring guardianship
• An up-to-date SMSF trust deed, including subsequent variations
• An up-to-date death benefit nomination (if applicable)
• Up-to-date pension documentation (if applicable)
• All trustee documentation, including details of directors and any changes
• A review of the ownership state of all types of wealth