SMSF Member Statement Template and How to Prepare SMSF Member Statement

SMSF member statement template

(SMSF member statement template attached at the end of the article.)

Not all SMSF accounting software has the function of detailed member reporting. An accountant could have reported thoroughly and beautifully on the fund’s financial position, operating performance, investment movements and tax, while not covering all the essential components for member statements.

A good member statement should detail contributions made during the year, the type of contributions, return on investments allocated during the year, tax allocated on member’s level and insurance cover.

More importantly, a good member statement shows the components of total benefits. For conditions of release purposes, member benefits can fall into three categories: preserved, restricted non-preserved or unrestricted non-preserved components. The unrestricted non-preserved portion can be accessed anytime, whereas preserved and restricted non-preserved can only be accessed when certain conditions are satisfied. From the tax perspective, the total member benefits include tax-free component and taxable component. If a member commences a pension before reaching 60, the taxable component of the pension is taxed at his or her marginal tax rate with 15% tax offset. The tax-free component is not assessable income. When a member’s benefits are distributed as death benefits and paid to an adult child, the taxable component of the death benefits is taxed in the hands of the adult child. These components are tracked each year back to the time when an SMSF was set up. It creates great difficulty for any retirement planning or estate planning without knowing the details of the components.

Although poor member reporting is detrimental for SMSF trustees, from an SMSF audit perspective, unfortunately a fund is not non-compliant when the member benefit components are not tracked each year. For funds with inadequate member reporting, we issue a management letter on this subject to raise the awareness of the SMSF trustees. As SMSF auditors, knowing the importance of detailed member statements, we urge all the accountants working with us to have member statements up to date.

Member statements are not difficult to prepare. If you are using quality SMSF accounting software, detailed member statements are built in. Otherwise you can use our template attached.

From the time SMSF receives its first roll-in cheque, coming with the cheque is a Rollover Benefits Statement which details all the important components. The Rollover Benefits Statement allows the receiving fund to apply the correct income tax to the components rolled over and maintain the preservation status of the benefits rolled over. The format of this form is slightly different for each transferring fund. There is a change in Rollover Benefits Statement from 1 July 2013, prior to this day; the transferring funds were required to show on the statement any current year contributions rolled out to a receiving fund. This is no longer the case and the current form does not include labels for this purpose.

After the initial roll-in, all contributions made by or on behalf of a member, and all earnings since 30 June 1999 are preserved benefits. Employer eligible termination payments rolled over into a super fund after 30 June 2004 are also preserved benefits. Restricted non-preserved benefits generally stem from employment-related contributions (other than employer contributions) made before 1 July 1999 or to rolled-over employer ETPs made before 1 July 2004. This component will not increase after 1 July 2004. Contributions received these days will not be either restricted non-preserved or unrestricted non-preserved. These components are more likely from roll-in amount.

Any non-concessional contribution will add to the tax-free component, the taxable component is simply the difference between total member benefits and tax-free component. Consequently, all positive earnings will from part of the taxable component. For accumulation account, the tax-free component will be expressed as a dollar amount and will not be affected by earnings, except when investment losses reduce the value of the superannuation interest below the value of the tax-free component.

Once a member commences a pension, the tax-free and taxable component will be a fixed percentage calculated at the pension commencement day.

The taxable and tax-free components are terminologies of simplified super system. Before 1 July 2007, superannuation interests consisted up to seven different “ETP Components” with each component separately taxed. Crystallisation is the process by which the ETP components are mapped to the tax-free and taxable components. The post June 83 component constitutes the taxable component and all other ETP components constitute the tax-free component. All funds should have already calculated the crystallised amount for each member by 30 June 2008.

SMSF member statement template

Attached is a member statement template which can be used to prepare detailed member statements.