Here are five things you can do with your SMSF to get the most out of it this financial year, writes Olivia Maragna.

If you missed out on organising your self-managed superannuation fund before the end of the financial year, take solace in the fact that you can now get things organised well and truly in advance of the next end of financial year.

Here are five things you can do with your SMSF to get the most out of it this financial year.

1 Plan to maximise your contributions

Currently the concessional (pre-tax) annual contribution cap is $30,000 per year for those aged under 49, and $35,000 for those aged 49 and over. Keep in mind that the over 65s will also have to meet the “work test” in order to contribute into super. The work test generally involves the individual working at least 40 hours over a single 30-day period during the financial year. The non-concessional (after-tax) annual cap is $180,000 per year and if the member is under 65, they can take advantage of bringing forward the two following years’ contributions to make a lump sum contribution of $540,000.

Contributing funds into super can provide for substantial tax savings where the income on the funds or earnings would ordinarily be taxed at personal marginal tax rates that are higher than the tax rate in the super fund, which potentially could be as low as 0 to15 per cent, saving you thousands.

2 Review your fund’s capital gains tax events

While capital gains and losses are included in your fund’s assessable income for capital gains tax purposes when you are in the accumulation phase, capital losses can only be used to offset capital gains and not other forms of income. As a result, plan ahead and review any CGT events, such as the sale of assets, that you are planning to realise this financial year and consider whether they can be offset by capital losses or consider the timing of when you realised the capital gain.

Care needs to be taken in this circumstance to avoid the Australian Taxations Office’s ruling on “wash sale” arrangements, where an asset is disposed of with the primary purpose of creating a capital loss, but where the taxpayer’s economic exposure in the asset is not significantly altered. Note that any capital losses can be carried forward to future financial years, however utilising these effectively may prove to be more beneficial sooner, and before you retire.

3 Explore the possibility of ‘in specie’ contributions

‘In specie’ contributions is where you can effectively transfer a limited variety of investments into the SMSF by related parties. This commonly includes listed shares and business real property such as your business’ premises. Contributing these to the fund allows you to retain the investment but also can provide substantial tax benefits by moving investments into potentially a more tax-effective environment where it can continue to grow long term.

Keep in mind that the transfer into your fund will trigger a capital gains tax event and will count towards your contribution caps – so plan to minimise this by monitoring your overall tax planning and timing of when you transfer the investment.

4 Are any members eligible for a pension?

If the fund has members over preservation age who can access their super, it may be worth considering drawing on your super fund through a pension. When drawing a pension, the tax on income from investments will reduce from 15 per cent to 0 per cent.

Care needs to be taken that the minimum pension payments are made in order to benefit from the 0 per cent tax rate.

Be aware that this is not a strategy that benefits everyone, so analysis needs to be done to ensure it is right for your personal circumstances and while there are potential tax benefits, the costs need to be considered also. Depending on the type of contributions you put into your super fund and the number of account balances you have in your SMSF, it may in fact be worthwhile to draw on some of your account balances; yet others may put you in a position where you are worse off.

5 Review your strategy

Part of the compliance process for a SMSF is that it has an investment strategy, and that the trustees are following that strategy. Regular reviews should take place in order for the trustees to ascertain whether any changes need to be made, either to the investments or the strategy itself.

A change in circumstances, retirement or incapacity may require an adjustment to your investment strategy so ensure you are reviewing this with your financial adviser and make any necessary changes to cater for changing circumstances. These are just some of the strategies that can be used to make your SMSF more effective for the financial year ahead.

As always, before implementing strategies around your SMSF, ensure you are talking to your financial adviser about your specific circumstances and to ensure you maintain your compliance at all times. A little forward planning may prove to be beneficial for this financial year and can also help boost your lifestyle in retirement.

Olivia Maragna is the co-founder of Aspire Retire Financial Services. Her advice is general and readers should seek their own professional advice before making financial decisions. You can follow Olivia on Facebook.

Posted by Olivia Maragna – The Age on 17th July, 2015