As we kick off with a new round of SMSF audits for the 2014 year, we have a new set of tips for how you can prepare early for a quick and easy audit.
Tip 1 – Appoint your auditor early to get your tax refund faster
Many SMSFs are entitled to tax refunds due to refundable imputation credits – especially super funds paying pensions to their members. Your SMSF tax return cannot be lodged until the auditor has issued their audit opinion. So engage with an auditor early in the financial year to ensure a quick turnaround of your audit and tax refund. Better in your pocket than the ATO’s!
Tip 2 – Investment strategies
There have been recent changes to SIS Regulation 4.09 Investment Strategies. The new Operating Standard now reads:
The trustee of the entity must formulate, review regularly, and give effect to an investment strategy that has regard to the whole of the circumstances of the entity including, but not limited to, the following:
- the risk involved in making, holding and realising, and the likely return from, the entity’s investments, having regard to its objectives and expected cash flow requirements;
- the composition of the entity’s investments as a whole, including the extent to which they are diverse or involve exposure of the entity to risks from inadequate diversification;
- the liquidity of the entity’s investments, having regard to its expected cash flow requirements;
- the ability of the entity to discharge its existing and prospective liabilities;
- whether the trustees of the fund should hold a contract of insurance that provides insurance cover for one or more members of the fund.
A pro-active review of your investment strategy to ensure it is current and considers insurance will ensure you keep your auditor happy this year.
Tip 3 – Current market valuations of your assets
The rules now require an annual valuation of all assets owned by your SMSF. This is to ensure the financial reports for your fund correctly reflect the current value of your retirement benefits.
If your SMSF has assets, such as real estate property, collectibles, shares in unlisted companies or trusts, loans etc., you can proactively prepare for your annual audit by obtaining independent market valuations of these assets now. Valuations need not be formal valuations in most instances, but ideally they should be in writing from an independent source.
Tip 4 – Take action to fix all breaches from last year
If your auditor notified you of any breaches of the SIS rules in their last audit report, read that report again and make sure that you have fixed all outstanding issues prior to having your fund audited again this year.
The ATO looks much more favorably on trustees who don’t ignore breaches, so it’s really important to show your auditor that you are taking your role as trustee seriously and have fixed any issues identified by the auditor.
Tip 5 – Make sure your records are complete
Nothing slows down an annual audit more than missing documents! Ask your advisor or auditor in advance for a list of documents they will require to complete your super fund reports and audit for the 2014 financial year. If in doubt, more records are much better than less.
Important: This content has been prepared without taking account of the objectives, financial situation or needs of any particular individual. It does not constitute formal advice. Consider the appropriateness of the information in regards to your circumstances.
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