SMSF Annual Return FAQ | Accurium

FAQ
This FAQ addresses questions from the webinar '2020 SMSF Annual Return' presented on 21 July 2020 and Mark Ellem's response to each of those questions.
No. The only property to be included at label J7 is real property, held by an SMSF under an LRBA. Real property held by an SMSF directly, no LRBA, is not required to be included in the property count label J7.

The better view is that as the property is effectively no longer held under an LRBA, due the full repayment of the loan. The relationship is now akin to a Custodian holding property on behalf of the SMSF. Further, the ATO previously registered a legislative instrument (10 April 2014) that provides an exception to the in-house asset definition once the loan under the LRBA has been fully repaid. This can be interpreted that the ATO no longer considers there to be an LRBA in place once the loan has been fully repaid and consequently, not to be included in the property count label J7.

An individual’s total superannuation balance is the total amount they hold in superannuation across all superannuation funds. If the individual is a member of a number of superannuation funds, then their interest in all superannuation funds will be used to calculate their total superannuation balance. From an SMSF perspective, the relevant amounts are reported to the ATO in the SMSF annual return, Member Information Section. An individual can review the reported amounts for total superannuation balance purposes, from each of their superannuation funds, in their myGov account.

The audit of an SMSF does not include the audit of the SMSF annual return. That is, the SMSF annual tax return does not require audit sign off. Whilst the auditor provides an audit opinion on the financial statements, which includes the provision for tax, the tax provision can be substantiated by relevant tax calculation reports. I suggest that you query the auditor as to why they require a signed copy of the annual return, as they are not auditing the TAX return. Further, make them aware of the wording of Trustee Declaration in the annual return and ask them how the trustee can sign the declaration prior to receiving a copy of the signed Audit Report.

Where the lodgement deadline for the annual return falls on a weekend or public holiday, the due date becomes the next business day. For example, the general lodgement deadline for the 2020 annual return is 15 May 2021, however, this is a Saturday, meaning this lodgement deadline is extended to 17 May 2021.

In respect of authority to lodge the relevant activity statement, authorisation by email is permitted, provided it states:

• they have authorised you to lodge the document, and

• the information is true and correct.

For further information click here to view the relevant page on the ATO’s website or search QC 41425 on the ATO’s website.

For an employer to meet their superannuation guarantee obligations and to be able to claim an income tax deduction, they must make the contribution to a complying superannuation fund. Super Fund Lookup advises that the status of ‘Regulation details removed’ means that ‘The regulation details of this SMSF have been removed from display in Super Fund Lookup by the ATO as a result of the fund not lodging its annual returns. It is not recommended that rollovers be made to funds that have had their regulation details removed’.

Whilst this does not state that the SMSF is not a complying fund, if the employer is aware that the status of the SMSF is ‘Regulation details removed’, this could be an indication that the SMSF has a compliance issue. An employer may decide not to contribute to the SMSF due to this, as it could jeopardise their SG obligations and tax deduction status.

For further information please refer to the FAQ section for employers in Super Fund Lookup or simply click here.

Firstly, the total superannuation balance reported in myGov for an individual should be used as a source of verification. It is the responsibility of the individual to ensure that their total superannuation balance at the relevant date, for example 30 June 2020, is correctly calculated. If there is a discrepancy with the amount determined and the amount shown in their myGov for their SMSF, contact the ATO to advise of the discrepancy and to have it rectified.

Please refer to the FAQ sheet from the webinar ‘Implications of COVID-19 on SMSF Property Investments’ for the answer to this question.

The tax law treats a pre 1 July 2017 market linked pension as a non-capped defined benefit income stream. Specifically, section 307.230(4) Tax Act 1997 includes a market linked pension (s.307(4)(h)) as an account-based pension for the purpose of calculating an individual’s total superannuation balance. Further, the 2020 SMSF annual return instructions restates section 307-230(4) and that it includes market linked pensions, for the purpose of completing label S2 'Retirement phase account balance – Non CDBIS' (page 151-152 of the 2020 SMSF annual return instructions).

Yes, and you would not be required to complete labels X1 and X2. X1 and X2 is only completed where an amount different from the amounts at S1 and S2, respectively, are to be used for the purpose of total superannuation balance. For further guidance please refer to the 2020 SMSF annual return instructions, page 153 – 154.

For an individual to claim a personal contribution as an income tax deduction, section 290-155 of the Income Tax Assessment Act 1997 requires the superannuation fund to which the contribution is made, to be a complying superannuation fund for the income year in which the member makes the contribution. Consequently, if the fund is a non-complying superannuation fund for the year, the member will be denied a deduction for any personal contribution made and effectively the contribution will be treated as non-assessable income, from the SMSF’s perspective, and counted against the member’s non concessional contribution cap.

Similarly, where an employer makes a contribution to a non-complying superannuation fund, no tax deduction will be allowed. Again, for further information please refer to the FAQ section for employers in Super Fund Lookup or simply click here.

The information on this article is provided by Mark Ellem ABN 69 989 271 960 and Accurium Pty Limited ABN 13 009 492 219 (Accurium). It is factual information only and is not intended to be financial product advice, legal advice or tax advice, and should not be relied upon as such. The information is general in nature and may omit detail that could be significant to your particular circumstances.  The information is provided in good faith and derived from sources believed to be accurate and current at the date of publication. While all care has been taken to ensure the information is correct at the time of publishing, superannuation and tax legislation can change from time to time and Mark Ellem ABN 69 989 271 960 and Accurium is not liable for any loss arising from reliance on this information, including reliance on information that is no longer current. We recommend that you seek appropriate professional advice before making any financial decisions. Links to third-party websites are inserted for your convenience, but do not constitute endorsement of material on those sites.

Disclaimer

This information is provided by Accurium Pty Limited ABN 13 009 492 219 (Accurium). It is factual information only and is not intended to be financial product advice, legal advice or tax advice, and should not be relied upon as such. The information is general in nature and may omit detail that could be significant to your particular circumstances. The information is provided in good faith and derived from sources believed to be accurate and current at the date of publication. While all care has been taken to ensure the information is correct at the time of publishing, superannuation and tax legislation can change from time to time and Accurium is not liable for any loss arising from reliance on this information, including reliance on information that is no longer current. We recommend that you seek appropriate professional advice before making any financial decisions.