It is an ATO requirement that an SMSF must prepare a set of Financial Statements and lodge an Income Tax Return with the Australian Taxation Office each year. If we are the accountant for your SMSF, we will lodge the annual return for your SMSF. We therefore rely on you to provide us with complete year end documents to perform the accounting process.
Allocation of Income
We use the daily weighted average balance method to allocate the SMSF income generated during the year to the Members in the Fund.
Legislation or Rulings
It is worth noting that there is no legislative requirement on a particular allocation method an SMSF must use to allocate income to its Members. As per the SIS act, the only requirement in allocating income to Members of the SMSF is to use a fair and reasonable approach. This leaves some discretions to the Trustees of an SMSF on how income should be allocated to its Members. For more information on the legislative framework, see the reference in the regulations on how income should be allocated to Members:
When Superannuation Warehouse performs the accounting process for your Fund, we use the daily weighted average balance method to allocate the income to the Fund’s Members. For example, if your Member balance consists of 40% of the Fund and the net income for the year is $60,000, your share of the net income is $24,000 (40% x $60,000).
Special considerations where a pension is in existence
If your Fund is partially in pension and partially in accumulation phase, the SMSF might need an Actuarial Certificate to determine the tax exempted income allocation. Please see our Actuarial Certificate website page for more information:
With Superannuation Warehouse as the accountant and the administrator of your SMSF, the accounting, tax and audit services for your SMSF are all taken care of. For more information on our services, please visit our administration page here.