Keep Calm and Don’t Panic – the ATO action on SMSF Investment Strategies
The funds that will receive the letters are those SMSFs that hold 90% or more of their investments in one asset of a single asset class.
The ATO will ask those trustees to review the fund’s investment strategy and to clearly document the reasons for investing in one asset or a single class of assets. The letter will further ask the trustees to provide their auditor with the documentation in order for the auditor to form an opinion on the fund’s compliance with the relevant law. The auditors of those funds will also be notified of the ATOs concerns.
What to do if you get a letter:
Review your fund’s investment strategy to ensure that the asset allocations of the fund meet the requirements of the written strategy, and that the reasons for holding a single or single asset class are documented. Amend the strategy, if needs be.
The ATOs position, which is guided by the SIS Act and Regs, and more information regarding SMSF investment strategies can be found here.
If you have been considering diversifying your investments, and you would like some help in determining what the best strategy would be for your fund, our team at Cordner Super Advisory [AFSL 502431] are able to assist. Click here for more details.
What not to do if you get a letter:
Ignore it and maybe it will go away (it won’t)
Call or write the ATO to tell them that how you are invested is none of their business (as the supervisory body for SMSFs, it is)
Your fund’s investment strategy is key to achieving your retirement and estate planning goals. It is in your best interest to make considered and intelligent decisions regarding your future financial security. Holding one asset or a single class of assets is not, necessarily, bad investing, but an inability to clearly articulate why the decisions were made and what the expected outcomes of your decisions are is a huge red flag.
Even if you don’t get a letter – Do you know where your fund’s investment strategy is? Do you know what it says? You should.
If you have any questions, comments or concerns, please contact the writer at elsa@cordner.com.au or call our office on (07) 5504 5700.
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