Does Your SMSF Investment Strategy Comply With New Regulations?

To make a self-managed super fund (SMSF) worthwhile you need to be confident that you can deliver better returns than the professionals.  A robust investment strategy gives you the best possible chance of achieving this. 

More control

Being in control of your own investment strategy is one of the main benefits of running your own SMSF. It gives you the ability to decide how you invest.  It also gives you the ability to manage tax in a way that is not available in a public offer fund, such as an industry or retail super fund.

As trustee of your SMSF, you are required by law to develop an investment strategy for your fund. Your investment strategy should:

• Reflect the purpose of your fund
• Be in line with each individual member’s investment profile
• Lay out the investment objectives of your fund
• Document the risk the fund is willing to accept
• Outline the types of investment you would consider holding.

More responsibility

Rules on how SMSF trustees manage and monitor their investments change often as part of the government’s Stronger Super initiative.  The new regulations increase the obligations on SMSF trustees.  SMSF trustees are now required to:

• Value assets at market value
  This could require an external provider to undertake valuations. The ATO has published guidance on valuations for SMSFs, available on their website.

• Consider  insurance  for members
  This will mean documenting the consideration of insurance as part of the investment strategy and during the regular reviews.

• Document and regularly review your investment strategy
  Trustees will need to substantiate compliance of this requirement by ensuring decisions are documented in resolutions and meeting minutes.

• Separate SMSF assets
  Although SMSFs are already required to keep SMSF assets separate from any other assets which may be held by the trustee, the ATO will now be able to enforce this requirement and can issue a fine of up to $11,000.

What Next?

Self Managed Superannuation Funds (SMSFs) continue to be the fastest growing sector of the Australian super industry.  Over the last 4 years, the number of SMSFs has grown by almost one third (27%) .  SMSFs are popular for many reasons, none more so than their practical utility.

Find out more how we can help you by here.

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