News & Updates

ATO Querying SMSFs Investment Strategies

  • Monday, September 23, 2019

Have you received a letter from the ATO about your SMSFs?

At the end of August 2019 The Australian Tax Office (ATO) sent letters to approximately 17,700 self-managed super fund (SMSF) trustees and their auditors.

Why you received this letter?

Under regulation 4.09 of the Superannuation Industry (Supervision) Act (SISA), your current SMSF investment strategies implemented may not meet the diversification requirements of this act, due to the ATO records showing your SMSFs may hold 90% or more of funds in one asset, or a single asset class.

What does this mean for you?

We advise trustees to check their investment strategy to make sure it abides by the Act and to have the investment strategy ready to show the SMSF auditor. Trustees must be able to provide SMSF auditor with evidence of how they consider their investment strategy meets the following requirements:

-The diversification of fund investments

-The risks of inadequate diversification within the context of their SMSF investment portfolio (for example, the risks associated with the fund's investments in a diversified portfolio of shares is likely to be lower than that of another asset class, such as cryptocurrency)

-The making, holding, realising and the likely return from their fund investments relating to their retirement objectives and expected cash flow requirements

-The liquidity of their investments, allowing the fund to meet costs and pay benefits as members retire

-Whether insurance cover should be held for one or more members

Why you need to act now?

The ATO warns trustees that penalties may apply if the auditor states you have failed to rectify non-compliance with these requirements.

How Crest Accountants can help you?

With over 45 years’ experience, Crest Accountants are specialists in SMSFs. We use our expertise in helping you understand new and changing legislation to make sure your SMFSs strategies meet the requirements. For us at Crest, knowing is achieving.

If you have any questions or concerns about your SMSF - get in contact with us today.

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