www.esuperfund.com.au

Questions & Answers - SMSF Compliance


+ What are the Annual Compliance Requirements for a SMSF?

Your SMSF must attend to certain annual reporting requirements each and every year. These include:

  •  
     
    Preparation of an annual Balance Sheet
  •  
     
    Preparation of an annual Profit & Loss Statement
  •  
     
    Preparation of annual Member Statements
  •  
     
    Preparation of annual Trustee Resolutions & Minutes
  •  
     
    Preparation of an annual Income Tax Return
  •  
     
    Preparation of an annual Audit
  •  
     
    Lodgement of the annual Tax Return

The above annual compliance requirements are the compliance requirements that a SMSF must attend to annually. Importantly ESUPERFUND attends to the above annual compliance requirements for your SMSF. You do not need to arrange for another accountant to prepare the above annual documentation as it is completed by ESUPERFUND. Our annual fee is per annum. According to the ASIC Report on Cost of Operating SMSFs, the average administration fee to run your own Self Managed Superannuation Fund (SMSF) is between $2,000 and $7,000 per annum. In most cases our competitors quote only their base fees that increase the more transactions or investments your SMSF has. At ESUPERFUND our price is fixed at per annum, irrespective of Fund size, number of Members or the number of transactions made by your SMSF. ESUPERFUND is a volume based business that has invested significant capital to streamline its systems and processes resulting in material efficiency savings which are passed on to clients. To further understand how we can keep our fees so low relative to other providers visit our article Tonic for the Sceptics now.

+ Does ESUPERFUND attend to the Annual Compliance Requirements including the Audit?

Yes. ESUPERFUND attends to the annual compliance requirements for your SMSF. You do not need to arrange for another Accountant to prepare any annual documentation as it is completed by ESUPERFUND.

+ What records do I have to keep with ESUPERFUND?

As a client of ESUPERFUND you are not required to provide source documentation relating to most of your SMSF Investments. That is ESUPERFUND receive electronic confirmation of all your Bank Transactions and Broker trades your SMSF makes, so no records are required from you each year about these Investments as we already have access to them. Importantly the information we receive is only electronic transaction data and we have absolutely no access to your Accounts. Only you as the SMSF Trustee can login and transact on the Accounts. This gives you total peace of your mind your super monies are totally secure. At financial year end you will be required to provide information to ESUPERFUND to attend to the SMSF annual compliance requirements. This includes rollover documentation, contribution details, share contracts, dividend and managed fund distribution statements and so on. To guide you on the information required, ESUPERFUND will send you an annual checklist in July of each year to ascertain the investments your SMSF has invested in and what additional information we require. Where applicable we will request certain information to be provided to finalise your SMSF annual compliance requirements. The Annual Compliance Checklist is typically sent in July each year and must be returned by October each year.

+ What is the process to prepare the annual compliance requirements for my SMSF?

Visit our website to find out the detailed information on the process to prepare the annual compliance documentation for your SMSF.

+ When does ESUPERFUND send me the Annual Compliance Checklist?

The Annual Compliance Checklist is typically sent in July each year. At financial year end you will be required to provide information to ESUPERFUND to attend to the SMSF annual compliance requirements. This includes rollover documentation, contribution details, share contracts, dividend and managed fund distribution statements and so on. To guide you on the information required, ESUPERFUND will send you an annual checklist to ascertain the investments your SMSF has invested in and what additional information we require. Where applicable we will request certain information to be provided to finalise your SMSF annual compliance requirements.

+ When do I have to provide the documentation requested in the Annual Compliance Checklist?

The Annual Compliance Checklist is typically sent to you in July each year. Once you have reviewed the annual checklist, you will need to collate the additional information and documentation requested. Once collated the information can be emailed, mailed or faxed to our office. The Annual Checklist will usually specify a due date to return the information which is usually 31 October following the end of the financial year.

+ How long does it take for ESUPERFUND to complete the Annual Compliance Requirements?

It is noted that the first year your SMSF is setup, the SMSF must lodge its Tax Return by 28 February following the end of the Financial Year. In the second year and future years the SMSF lodge its Tax Return by 15 May following the end of the Financial Year. Accordingly by requesting that the Annual Checklist is provided to our office by 30 September, this gives us sufficient time to prepare and lodge the annual compliance documentation by the due date. It should be noted that client's annual compliance work is completed in the order submitted by clients so it is important to meet the deadlines set. ESUPERFUND is always aware of the due lodgement dates and will ensure that these dates are met to the extent that the information is provided by the requested dates.

+ What happens when ESUPERFUND has prepared the Annual Compliance work?

On completion you will be notified via email that the annual compliance documentation is ready for review and signing from the client portal. Once you are satisfied that the documentation is correct, you simply have to sign and upload, email or mail the documentation to our office. If you have any queries about the documentation it is preferred that you email your queries through to our office and the accountant who prepared the documentation will respond to your queries as soon as possible. It is preferred that you do not call ESUPERFUND with any queries as it is more efficient for the accountant to review your query and respond with an appropriate answer by email. Importantly a copy of the annual compliance documentation will be available to download or print for your records.

+ When is my SMSF annual Tax Return due to be lodged with the ATO?

In the first year your SMSF is setup the SMSF must lodge its Tax Return by 28 February following the end of the Financial Year. In the second year and future years, the SMSF must lodge its annual Tax Return by 15 May following the end of the Financial Year.

+ When do I pay the SMSF annual tax liability?

When the Tax Return has been completed at financial year end, ESUPERFUND will send the Tax Return to you for review and signing. The Tax Return will also indicate the tax liability due and payable. Once signed and returned to our office, the Tax Return is lodged with the ATO. In the first year your SMSF is setup the SMSF must pay its tax liability by 28 February following the end of the Financial Year. In the second year and future years, the SMSF must pay its tax liability by 15 May following the end of the Financial Year.

+ How do I pay the SMSF annual tax liability?

The tax liability must be paid from the Transaction Bank Account established for your SMSF. ESUPERFUND will provide you with the relevant BPAY details to arrange payment of the tax liability conveniently from your Transaction Bank Account.

+ How does ESUPERFUND track your SMSF transactions?

When you become a client of ESUPERFUND, the Commonwealth Bank Accelerator Cash Account will be established for your SMSF which will act as the Transaction Account for your SMSF. By using the Commonwealth Bank Accelerator Cash Account as the preferred Transaction Account for our clients, we are able to ensure that our services are provided at a fee significantly below market. This is because we are able to electronically access the transactions made by your SMSF in order to attend to the SMSF annual compliance requirements. That is at the end of each financial year, the Commonwealth Bank will send to ESUPERFUND an annual data file of all your SMSF transactions. This enables our office to attend to your SMSF's annual compliance obligations. Minimal records are required from you each year as we already have access to your SMSF transaction data. It is important to understand that only electronic data files are provided to ESUPERFUND. We have absolutely no access to your Transaction Bank Accounts and cannot actually login to your account to access the required data.

+ How does ESUPERFUND track your SMSF trading activities?

At the end of each financial year, CommSec will send to ESUPERFUND an annual data file of all your SMSF trades and transactions. This enables our office to attend to your SMSF's annual compliance obligations. No trading records are required from you each year as we already have access to the data. It is important to understand that only electronic data files are provided to ESUPERFUND. ESUPERFUND has absolutely no access to your Trading Platform and cannot actually login to your account to access the required data.

+ How does ESUPERFUND track and allocate rollovers to Members?

Each rollover must be allocated to a specific Member as part of the annual compliance process. This is a legal requirement. Each time you Rollover monies from another Superfund into the Transaction Bank Account, that Superfund must provide you with a Rollover Statement. In order to determine which Member has made the Rollover, ESUPERFUND will require the Rollover Statement issued by the previous Superfund. This will have all the information about the Rollover including the Member receiving the Rollover and the amount rolled over. ESUPERFUND will request the Rollover Statements at the end of the Financial Year as part of preparing the SMSF annual compliance requirements. This information is requested in the annual compliance checklist sent to you in July each year.

+ How does ESUPERFUND track and allocate contributions to Members?

All contributions made to your SMSF whether in cash or via a transfer of assets must be allocated to an SMSF Member. This is a legal requirement. It is also a legal requirement that each Member be issued with a Member Statement annually detailing their Member Balance movements including contributions made. Typically the Member making the contribution will be detailed on the Bank Statement. To the extent that the narration on the Bank Statement is insufficient, you will be asked to confirm on whose behalf the contributions have been made using an annual checklist we send to all SMSF clients each year in July. You do not need to send us confirmation at the time each contribution is made. This information is only required annually and we will guide you through the process and prompt you when information is required from you.

+ How does ESUPERFUND track if a contribution made is a Non Concessional or Concessional contribution?

All contributions made to your SMSF whether in cash or via a transfer of assets must be allocated to an SMSF Member. In addition the correct contribution type must be recorded. This is a legal requirement. It is also a legal requirement that each Member be issued with a Member Statement annually, detailing their Member Balance movements including contributions and the contribution type made. Typically the Member making the contribution will be detailed on the Bank Statement. However the type of Contribution will not be able to be determined solely from the Bank Statement. Accordingly you will be asked to confirm the contribution type made for each Member using an annual checklist we send to all SMSF clients each year in July. You do not need to send us confirmation of the contribution type at the time each contribution is made. This information is only required annually and we will guide you through the process and prompt you when information is required from you. In addition please note that if you have claimed a Tax Deduction for a personal contribution, we will require a completed ATO Tax Deduction Form evidencing the Tax Deduction.

+ How does ESUPERFUND track Member Pension and Lump Sum Personal Withdrawals?

Each Pension or Lump Sum Withdrawal must be allocated to a specific Member as part of the annual compliance process. This is a legal requirement. Typically the Member making the withdrawal will be detailed on the Bank Statement. To the extent that the narration on the Bank Statement is insufficient, you will be asked to confirm which Member made the withdrawal using an annual checklist we send to all SMSF clients each year in July. You do not need to send us confirmation at the time each withdrawal is made. This information is only required annually and we will guide you through the process and prompt you when information is required from you. Remember you can only make withdrawals from the SMSF if eligible. Learn more about (For more click access to super benefits).

+ How does ESUPERFUND track Income derived by the SMSF?

All Income derived by your SMSF must be deposited into your Transaction Bank Account. This includes interest, dividends, rent and so on. This allows us to track the Income for the SMSF and report it at year end in the SMSF Financial Statements. There will be times however that income will not be deposited into the SMSF or we will be unable to determine what the income relates to. For example interest that is reinvested in a Term Deposit or dividends that are reinvested under a Dividend Reinvestment Scheme. These types of transactions are allowable, however in this case additional information evidencing the Income will be required from you such as the Term Deposit or dividend statements. Any additional information is requested using an Annual Checklist we send to all SMSF clients each year in July.

+ How does ESUPERFUND track Expenses paid by the SMSF?

All expenses paid from your SMSF must be paid from the Transaction Bank Account. This allows us to track the expenses for the SMSF and report them at year end in the SMSF Financial Statements. There will be times however that we will require additional information about the expenses paid by your SMSF including receipts to ensure that the expenses are in the correct name. For example we will require a copy of your Insurance Policy to ensure that the policy has been taken out in the name of the SMSF. Any additional information is requested using an Annual Checklist we send to all SMSF clients each year in July.

+ How does ESUPERFUND track Transactions it cannot identify?

ESUPERFUND will send you an Annual Checklist in July of each year detailing the information it has and requesting additional information about your SMSF activities that we do not have data for. Where applicable we will request additional information to be provided to finalise your SMSF annual compliance requirements. However in most cases minimal information will need to be provided by you as it will be electronically accessed by ESUPERFUND.

+ How are Member's Benefits tracked in the SMSF?

All Members of a SMSF have a proportional interest in the SMSF assets based on the contributions and rollovers made to the SMSF and any withdrawals made from the SMSF by each Member. This means that if one Member contributes 100% of monies to the SMSF and a second Member contributes no monies, then the Member making the total contributions to the SMSF will own 100% of the SMSF. Similarly if one Member contributes say $60,000 to the SMSF and the other Member contributes say $40,000 to the SMSF, then Member 1 will own 60% of the SMSF assets and Member 2 will own 40% of the SMSF assets. Each Members percentage or proportional interest in the SMSF assets is constantly changing. That is each time that a Member contributes or withdrawals monies from the SMSF their proportional interest in the SMSF changes. ESUPERFUND tracks each Members proportional entitlement in the SMSF by allocating every rollover, contribution and withdrawal to a specific Member. This is a legal requirement.

+ How does ESUPERFUND allocate Earnings to Member's Accounts?

Your SMSF Earnings are allocated to each Member on a proportional basis based on each Members percentage interest in the SMSF. This is done by ESUPERFUND automatically as part of the annual compliance process and no action is required by you. Importantly as part of the annual compliance process ESUPERFUND will prepare a Member Statement for each Member of the SMSF. This is a legal requirement. The Member Statements are included in the annual compliance documents completed for clients and must be approved by you as the SMSF Trustee before lodgement with the ATO.

+ What are the Components that make up my SMSF Benefit and does ESUPERFUND track each component separately each year?

Each SMSF Member Benefit is comprised of a "Taxable Component" and "Tax Free Component". The Tax Free Component typically comes from after tax personal "Non Concessional" contributions. The "Taxable Component" typically comes from "Concessional contributions", which include employer contributions and salary sacrifice contributions. Importantly ESUPERFUND tracks each component and provides a breakdown in each Member's Member Benefit Statement. No action is required by you.

+ How does ESUPERFUND track a Member's Accumulation and Pension Account?

Before you commence a Pension (SABP or TRAP) your SMSF Benefit is recorded in your "Accumulation Account". When you commence a SABP/TRAP your SMSF Benefit is transferred and recorded in your "SABP Account" / “TRAP Account”. These are simply "Accounting Entries" in your SMSF and do not require separate Bank Accounts for each Account Type.

Unlike Retail Funds, a SMSF can accept contributions (subject to the normal contributions rules) and rollovers after the SABP/TRAP has commenced. These contributions and rollovers continue to be made to the Transaction Bank Account setup for your SMSF. When you make additional contributions and rollovers to your SMSF after you commence a SABP/TRAP, they are allocated to your "Accumulation Account".

This will mean that you will have two "Accounting Accounts" at the same time in this case, namely a "SABP Account" or “TRAP Account” paying your Pension and an "Accumulation Account" which represents the additional contributions and rollovers made to your SMSF after commencing the Pension. The difference between each Account is the "SABP Account" does not pay tax on earnings and realised capital gains but the "Accumulation Account" and “TRAP Account” do pay tax on earnings and realised capital gains at up to 15%.

Importantly ESUPERFUND tracks each component and provides a breakdown in each Member's Member Benefit Statement. No action is required by you.

+ What Minutes are required to be prepared by you as the SMSF Trustee?

As a Trustee you must ensure all investment decisions are made in accordance with the documented Investment Strategy of the SMSF. We recommend that investment decisions are documented detailing how they conform to the Investment Strategy of the SMSF. Documenting Investments does not mean that you document every Investment made the SMSF. Typically investment themes should be documented. For example you may be acquiring blue chip shares for capital growth and tax effective fully franked dividends. In this case, one investment minute should be prepared detailing the rationale for this investment. You should not prepare a separate minute for every blue chip shares purchased. This is unnecessary. Similarly you may invest in several Term Deposits for capital stability and to generate a consistent ongoing yield. Again, in this case one investment minute should be prepared detailing the rationale for this investment. You can download a Standard Investment Minutes today.

+ Do I have to undertake an Annual Investment Review?

Yes. The SMSF Trustees must review the Investment Strategy of the SMSF annually and at such other times as a significant event occurs which affects the SMSF. This does NOT mean that each individual Investment must be reviewed. Individual Investments can be overseen on a daily basis (i.e. the sharemarket can change rapidly) and changed at any time. The Investment Review relates to reviewing the overall Investment Strategy of the SMSF. For example the SMSF Trustee may decide over time to change the SMSF asset allocation when moving from working to retirement, or the methodology when choosing an Investment. We recommend a minute be prepared detailing the results of the Annual Investment Review of the SMSF. In many cases there will be no change to the Investment Strategy and the underlying Investments making up that strategy. In this case a Minute will typically state that there has been no material change in the Investment Strategy or the Investments of the SMSF. Alternatively if there has been a material change in the Investments of the SMSF this should be minuted as part of the Annual Investment Review. For example you may be moving from an aggressive investment theme that invests predominantly in speculative and blue chip shares as you were working and required capital growth to a more capital stable income generating investment theme as you were approaching or had retired.

+ When do I pay my SMSF Tax on earnings and contributions?

Tax is paid on your SMSF earnings and Concessional Contributions annually on the lodgement of your SMSF Tax Return. To calculate the tax liability of the SMSF, all tax deductions and tax credits are deducted before determining the final tax liability payable by the SMSF for the year. The final tax liability is payable when the Tax Return is due for lodgement with the ATO. It is noted in the first year your SMSF is setup the SMSF must lodge its tax return by 28 February following the end of the Financial Year. In the second year and future years the SMSF must lodge its tax return by 15 May following the end of the Financial Year.