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SMSF YEAR END PLANNING GUIDE 2025

Executive Summary

This document provides SMSF accountants with a comprehensive framework to guide clients through critical end-of-year considerations for the 2024-25 financial year. The strategies outlined focus on maximizing tax effectiveness, ensuring compliance, and positioning portfolios for the upcoming financial year.

Key Dates and Deadlines

Critical Year-End Dates

  • 30 June 2025: Financial year end
  • 28 July 2025: Last day for concessional contributions to count toward 2024-25 cap
  • 31 October 2025: SMSF annual return lodgement deadline
  • 31 January 2026: Member annual statements deadline

Quarterly Deadlines

  • 28 July 2025: Quarter 4 SG contributions due
  • 28 October 2025: Quarter 1 SG contributions due (2025-26)

Contribution Strategies

Concessional Contributions (2024-25)

  • Annual cap: $30,000 for individuals under 75 (subject to eligibility requirements such as the work test if aged 67–74).
  • Carry-forward provisions: Available for members with total super balance under $500,000
  • Strategy considerations:
    • Review unused carry-forward amounts from previous years
    • Consider salary sacrifice arrangements before 30 June
    • Employer contributions must be received by 28 July to count toward 2024-25

Non-Concessional Contributions

  • Annual cap: $120,000
  • Bring-forward rule:  If you’re under 75 years of age at any time in a financial year- Up to $360,000 over three years, depending on Total Super Balance (TSB) at 30 June 2024:
    – TSB < $1.68M → $360,000
    – TSB $1.68M–$1.79M → $240,000
    – TSB $1.79M–$1.9M → $120,000
    – TSB ≥ $1.9M → Not eligible for non-concessional contributions.
  • Age restrictions: under 75 years of age at any time in a financial year-
  • Key considerations:
    • Total super balance at 30 June 2024 affects eligibility
    • Members with balance ≥$1.9 million cannot make non-concessional contributions

Government Co-Contributions

  • Eligibility: Income up to $58,445 for full co-contribution
  • Maximum co-contribution: $500
  • Requirements: 10% or more income from employment/business
  • Action items: Ensure eligible members maximize personal contributions

Investment and Portfolio Management

Capital Gains Tax Planning

  • Pre-30 June considerations:
    • Review unrealized capital gains and losses
    • Consider crystallizing losses to offset gains
    • Assess segregated vs unsegregated assets
    • Plan timing of asset disposals

Asset Allocation Review

  • Diversification assessment: Ensure compliance with investment strategy
  • Liquidity planning: Maintain adequate cash reserves for:
    • Minimum pension payments
    • Operating expenses
    • Potential member benefit payments
  • Related party investments: Review compliance with 5% in-house asset rule

Property Investments

  • LRBA compliance: Ensure borrowing arrangements remain compliant
  • Maintenance and improvements: Complete necessary work before year-end
  • Valuations: Obtain current market valuations for annual accounts

Pension Phase Considerations

Minimum Pension Payments

  • 2024–25 Minimum Pension Withdrawal Rates:
    – Under 65: 4%
    – 65–74: 5%
    – 75–79: 6%
    – 80–84: 7%
    – 85–89: 9%
    – 90–94: 11%
    – 95+: 14%
  • Pro-rata calculations: For pensions commencing during the year
  • Final payment timing: Must be made by 30 June 2025
  • Documentation: Ensure proper pension documentation and variations

Account-Based Pension Management

  • Transfer balance cap: $1.9 million for 2024-25
  • Excess transfer balance: Monitor and address any breaches
  • Pension asset segregation: Review segregation strategies for tax optimization

Transition to Retirement Pensions

  • Contribution restrictions: Members cannot make non-concessional contributions if unrestricted
  • Minimum/maximum payment rules: Ensure compliance with annual limits
  • Employment status: Review ongoing employment arrangements

Compliance and Documentation

Investment Strategy Review

  • Annual review requirement: Ensure strategy reflects current circumstances
  • Member considerations: Age, retirement timeline, risk tolerance
  • Asset allocation: Confirm investments align with documented strategy
  • Insurance needs: Review adequacy of death and TPD cover

Regulatory Compliance

ATO Compliance Focus for 2025:
– Ensure pension payments are made in full and on time
– Confirm accuracy of asset market valuations
– Review related-party transactions and in-house asset limits
– Monitor personal use of SMSF assets

  • Sole purpose test: Ensure all activities support retirement income
  • Prohibited transactions: Review all related party dealings
  • Market value reporting: Obtain current valuations for all assets
  • Member benefit statements: Prepare annual member communications

Administrative Requirements

  • Minutes and resolutions: Document all trustee decisions
  • Register updates: Maintain current member and asset registers
  • Banking arrangements: Review and document all accounts
  • Insurance policies: Confirm coverage and beneficiary arrangements

Tax Optimization Strategies

Fund-Level Tax Planning

  • 15% tax rate: Maximize assets in accumulation phase where appropriate
  • 0% tax rate: Optimize pension phase asset allocation
  • Franking credits: Strategic use of franked dividends
  • CGT exemption: Maximize use of pension phase CGT exemption

Member-Level Considerations

  • Tax-free vs taxable components: Plan withdrawal strategies
  • Salary sacrifice optimization: Balance contributions with other tax strategies
  • Spouse contributions: Utilize spouse contribution tax offsets where applicable
  • Small business CGT concessions: Consider rollovers and retirement exemptions

Estate Planning Integration

Death Benefit Strategies

  • Binding nominations: Review and update beneficiary nominations
  • Tax implications: Plan for dependant vs non-dependant beneficiaries
  • Estate planning coordination: Align with broader estate planning objectives
  • Insurance arrangements: Ensure adequate cover and appropriate ownership

Succession Planning

  • Corporate trustees: Consider benefits of corporate vs individual trustees
  • Next generation involvement: Plan for involving adult children
  • Power of attorney: Ensure appropriate arrangements for decision-making
  • Reversionary pensions: Review appropriateness of reversionary arrangements

Risk Management

Insurance Review

  • Coverage adequacy: Ensure death and TPD cover meets needs
  • Premium sustainability: Review impact on retirement savings
  • Group vs retail: Compare policy features and costs
  • Beneficiary arrangements: Confirm nominations align with estate plans

Investment Risk Management

  • Concentration risk: Review single asset exposures
  • Liquidity risk: Ensure adequate cash flow for obligations
  • Market risk: Consider portfolio volatility and member risk tolerance
  • Operational risk: Review fund administration and governance

Pre-Year-End Action Checklist

By 20 June 2025

  • [ ] Review contribution capacity and make additional contributions if beneficial
  • [ ] Assess investment portfolio for rebalancing opportunities
  • [ ] Complete property maintenance and obtain current valuations
  • [ ] Review and update investment strategy if required

By 25 June 2025

  • [ ] Finalize any asset sales or purchases for CGT planning
  • [ ] Ensure minimum pension payments are on track
  • [ ] Review insurance arrangements and make necessary changes
  • [ ] Prepare draft accounts and identify any issues

By 30 June 2025

  • [ ] Make final minimum pension payment for the year
  • [ ] Complete all planned investment transactions
  • [ ] Ensure all contributions are received (noting 28 July deadline for concessional)
  • [ ] Obtain final asset valuations as at 30 June

Post-Year-End Priorities

July 2025

  • Accounts preparation: Compile annual financial statements
  • Tax return preparation: Complete SMSF annual return
  • Member statements: Prepare annual member benefit statements
  • Investment strategy: Conduct formal annual review

Ongoing Monitoring

  • Regulatory changes: Stay informed of legislative updates
  • Market conditions: Monitor investment performance and rebalancing needs
  • Member circumstances: Review changing member needs and objectives
  • Compliance calendar: Plan for upcoming quarterly and annual obligations

Key Performance Indicators

Financial Metrics

  • Return on investment: Compare performance against benchmarks
  • Cost effectiveness: Monitor expense ratios and administration costs
  • Tax effectiveness: Measure after-tax returns and tax savings
  • Pension adequacy: Assess projected retirement income outcomes

Compliance Metrics

  • Regulatory compliance: Maintain 100% compliance with SMSF regulations
  • Documentation standards: Ensure all decisions are properly documented
  • Timeliness: Meet all lodgement and payment deadlines
  • Member satisfaction: Regular review of member needs and expectations

Conclusion

Effective end-of-year planning for SMSFs requires careful coordination of contribution strategies, investment management, tax optimization, and compliance requirements. This document provides the framework for systematic review and action to ensure clients maximize their retirement savings while maintaining full regulatory compliance.

Regular communication with clients throughout the year, combined with focused end-of-year review processes, will help ensure optimal outcomes and position the fund for continued success in the following financial year.