Email Copy: Investment Strategy Email for all SMSF Trustees

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URGENT: Commissioner of Taxation Blitz on Super Fund Investment Strategies

In 2020 the Commissioner of Taxation updated investment strategy requirements for trustees of self managed super funds.  The Commissioner, in a lengthy guidelines states:

1. An investment strategy must be in writing and reviewed annually ready for sign off by the Fund’s auditor.
2. An investment strategy must look at the members of the Fund, their ages, their retirement income objectives and plan a strategy to meet their retirement income requirements.
3. If there is primarily one asset class such as property or equities or cash then the Trustee must provide commentary on how that asset class meets the needs of the members.
4. If there is borrowing how the Trustee is to cover leverage risk – which would also apply to derivatives and must be accompanied by a Derivatives Risk Statement.

Importantly the Commissioner of Taxation states that the SMSF Trustee must have an updated investment strategy that meets the new guidelines for the income years ending 30 June 2020 and also the year ending 30 June 2021.  If the auditor of the Fund qualifies the Fund’s investment strategy there is a $4,200 fine for each Trustee individually.

To ensure that your Fund meets these upgraded and updated guidelines we suggest a three step process:

1. Complete the attached data capture showing what asset classes your Fund intends to invest in and broadly what percentages to allow for a rise and fall in asset prices. For example this may be 10% - 30% in cash or 60% - 90% in equities and managed funds. If you are unsure of what to do please contact us and we can help you in the preparation of the Fund’s updated investment strategy from scratch.
2. Forward the data capture to us and we will look at all the circumstances of the Fund, the members ages and superannuation benefit stage, plus other investment strategy requirements and then complete a draft investment strategy for your review.
3. Review of the investment strategy by the Trustees of the Fund and sign off using the trustee minutes which will be attached to the final investment strategy. The final investment strategy will be reviewed  by the Fund’s auditor to sign off for compliance purposes.  To be transparent all auditors have been put on notice of the upgraded ATO requirements for SMSF investment strategies.

If you complete the data capture, enabling us to correlate this information with fund member details a lower fee of $350 will be charged.  It is important to complete this task immediately given the fund’s audit requirements and the Commissioner’s spotlight and increased audit emphasis on investment strategies. 

Alternatively you could produce the Fund’s investment strategy having regard to all of the above factors and following a review of the ATO SMSF investment strategy requirements as published on the ATO website.  In this case we take no responsibility for advice to the Trustee in respect of the Fund’s investment strategy and are thus indemnified from any recourse against any possible penalties or fines of $4,200 per Trustee.

SMSF Investment Strategy Upgrade Letter LYD July 2021