SMSF Specialist Advisor (SSA) Exam flashcards

32 cards. Read the term and the definition here. The deck at the top of this page is optional.

SMSF member limit

An SMSF can have a maximum of four members, all of whom must be trustees or directors of the corporate trustee.

Sole purpose test

The fund must be maintained solely for retirement benefits or benefits on death, disability, or termination of employment; no pre-retirement access.

In-house asset limit

Investments in related parties or assets of the fund must not exceed 5% of the fund's total assets at market value.

Limited recourse borrowing

SMSF can borrow to acquire a single asset if the lender's recourse is limited to that asset, and the asset is held in a separate trust.

Concessional contributions cap

The annual cap on pre-tax contributions is $30,000 for 2024-25; excess amounts are taxed at the member's marginal rate plus an excess contributions charge.

Non-concessional contributions cap

The annual cap on after-tax contributions is $120,000 for 2024-25; members under 65 may bring forward up to $360,000 over three years.

Bring-forward rule

Members under 65 with total super balance below $1.9 million can contribute up to three years of non-concessional cap in one year, subject to limits.

Total super balance threshold

If total super balance exceeds $1.9 million (2024-25), no further non-concessional contributions can be made; indexation applies.

Minimum pension drawdown

Account-based pensions require annual minimum payments based on age: 4% for 55-64, 5% for 65-74, 6% for 75-79, 7% for 80-84, 9% for 85-89, 11% for 90-94, 14% for 95+.

Investment strategy requirement

Trustees must formulate and review an investment strategy considering risk, diversification, liquidity, and cash flow, and consider insurance for members.

Annual audit requirement

An approved SMSF auditor must audit the fund annually; the auditor must be independent and registered with ASIC.

Record keeping period

Trustees must keep records of contributions, rollovers, pensions, and investments for at least 5 years; trustee minutes for 10 years.

Administrative penalties

The ATO can impose penalties on trustees for contraventions, such as $4,500 per trustee for certain breaches, and may disqualify the fund.

Single-member fund trustees

A single-member SMSF must have either two individual trustees or a corporate trustee with a sole director.

Corporate trustee advantage

A corporate trustee provides continuity, easier member changes, and limited liability, but costs more to establish and maintain.

Contribution acceptance rules

Funds can accept contributions for members under 65 without work test; for 65-74, work test or work test exemption applies.

Work test exemption

Members aged 65-74 with total super balance below $300,000 can make contributions for 12 months after the financial year they last met the work test.

Preservation age

Preservation age depends on birth date: age 55 for those born before 1 July 1960, increasing to 60 for those born after 30 June 1964.

Condition of release

Events allowing access to super: retirement, reaching 65, permanent incapacity, terminal illness, or death; each has specific criteria.

Transition to retirement

Members who reached preservation age can start a TRIS while still working; earnings taxed at 15% and pension payments between 4% and 10%.

Excess contributions tax

Excess concessional contributions are included in the member's assessable income and taxed at marginal rates, with a 15% offset for tax already paid.

Division 293 tax

Additional 15% tax on concessional contributions for individuals with income over $250,000, applied to the excess over the threshold.

SMSF auditor independence

The auditor must not be a member, trustee, or associated with the fund's financial operations; independence is required by law.

Auditor contravention report

Auditors must report certain contraventions to the ATO, such as breaches of the in-house asset rules or lending to members.

Rectification direction

The ATO can issue a direction to rectify contraventions within a specified period; failure can lead to penalties or disqualification.

Education direction

The ATO can require trustees to complete an approved education course on SMSF compliance after certain contraventions.

Disqualified trustee

Individuals who are insolvent, convicted of certain offences, or have been disqualified by the ATO cannot be SMSF trustees.

Investment strategy review

Trustees must review the investment strategy regularly, at least annually, and consider diversification, liquidity, and member circumstances.

Insurance consideration

Trustees must consider whether to provide insurance for members, including death, TPD, and income protection, as part of the investment strategy.

Valuation of assets

Assets must be valued at market value for reporting and compliance purposes, especially for in-house asset and total super balance tests.

Related party transactions

Investments in related parties are limited to 5% of total assets, and acquisitions from related parties must be at market value.

SMSF annual return

Trustees must lodge an annual return with the ATO, including financial details, member contributions, and compliance information.