Lever Group accounting news and tax updates

Taxation Services

We regularly deal with a broad range of personal and corporate taxation issues and make a point of understanding the individual needs of every client. Whether you need advice on company tax, personal tax effectiveness or indirect taxation including payroll tax and GST, our team will identify the best solutions for you.

Our taxation services include:

  • Preparation and lodgement of taxation returns
  • Capital gains taxation planning
  • Fringe benefits tax returns
  • Land tax returns
  • Payroll tax returns compliance
  • Tax planning and minimisation
  • PAYG and superannuation compliance

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Category: SMSF news

  1. WHAT IS AN SMSF AUDITOR AND WHAT DO THEY DO?

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    Self-managed super fund (SMSF) trustees are required to appoint an ATO-approved SMSF auditor no later than 45 days before lodging their SMSF annual return. An SMSF auditor is a professional who assesses your fund’s compliance with superannuation law and examines your fund’s financial statements.

    SMSF auditor eligible requirements
    Your SMSF auditor must be:

    • Independent. SMSF auditors cannot audit a fund that they hold financial interest in, or have a close personal or business relationship with the SMSF members or trustees.
    • Registered with ASIC (Australian Securities & Investments Commission) and holds an SMSF auditor number for you to provide on your annual return.

    What will your SMSF auditor do?
    An SMSF auditor provides you with an independent opinion on the existing assets in your SMSF and whether or not your fund complies with the rules outlined in the Superannuation Industry (Supervision) Act 1993.

    When preparing for an audit, an SMSF auditor will issue a Terms of Engagement Letter to the trustee(s) of the fund, which includes the roles and responsibilities for parties involved in the audit as well as the range of the audit. In the case that your SMSF auditor’s primary contact is your accountant, your accountant will be issued a separate Terms of Engagement Letter.

    By clearly outlining each parties’ capabilities, a Terms of Engagement Letter helps you, your accountant and your auditor to avoid any misunderstandings and also protects audit evidence provided by your auditor from unintended alterations. In turn, SMSF auditors who fail to follow standards or take shortcuts can be sued or imposed penalties by the Court.

    The Terms of Engagement Letter also acts as a contract to keep parties accountable during compliance breaches and prevents cases of ‘opinion shopping’ where trustees look to other auditors for unqualified opinions. Trustees may end up being audited by the ATO in the event that they breach the Terms of Engagement Letter and ‘opinion shop’, as it comprises auditor independence.

  2. BUYING PROPERTY THROUGH YOUR SMSF

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    Using SMSFs to buy property has become increasingly popular among Australians in recent years, particularly since it became possible for SMSFs to borrow money to fund a direct property purchase.

    Residential property

    A residential property owned by an SMSF has some limitations as to who it can be leased to.

    To buy property through your SMSF, the property must meet the following requirements:

    • It meets the ‘sole purpose test’ of solely providing retirement benefits to members of the fund.
    • It is not acquired from a related party of a fund member.
    • It is not to be lived in or rented by a fund member or a party related to a fund member.

    Commercial property

    A commercial property owned by an SMSF can be leased to a wider range of tenants than residential properties. Commercial property purchased for business purposes can be purchased from a member of the SMSF or a related entity. This allows small business owners to use their SMSF to purchase the premises from which their own business is run, enabling them to pay rent directly to their fund. This can be preferable to paying rent to an alternate landlord. However, keep in mind that rent must be at market rate and be paid promptly and in full at each due date.

    SMSF borrowing

    SMSFs can borrow money to purchase a property, however, the borrowing criteria for an SMSF is generally much stricter than regular property loans taken out by individuals. All loans must be undertaken through a limited recourse borrowing arrangement (LRBA). An LRBA involves an SMSF trustee taking out a loan to purchase a single asset, such as a residential or commercial property. Under the Superannuation Industry (Supervision) Act 1993, super fund trustees can use borrowed money to pay for regular repairs and maintenance. However, borrowed money under the LRBA cannot be used for property improvements or renovations that result in the acquirable asset becoming a different asset. This may include adding additional rooms to the property or completely renovating a room.

    Tax consequences

    Buying and renting property through an SMSF also comes with tax consequences. SMSF funds are required to pay 15% tax on rental income from properties purchased through the fund. However, properties held for over 12 months receive a one third discount on any capital gains made upon the sale, bringing any CGT liability down to 10%.

    Expenses such as interest from loans, council rates, maintenance and insurance can be claimed as tax deductions by the SMSF.

    As well as this, once SMSF members reach pension phase, any rental income or capital gains arising in the fund will be tax-free.

    SMSF property costs

    SMSF property sales often attract higher fees that can end up reducing your super balance. Fees and charges can include:

    • legal fees,
    • property management fees,
    • bank fees,
    • advice fees, and
    • stamp duty.