ATO SMSF GUIDE PDF

Your investment strategy is your plan for making, holding and realising assets consistent with your investment objectives and retirement goals. The superannuation laws require that you must prepare and implement an investment strategy for your self-managed super fund SMSF which you must then give effect to and review regularly. Your SMSF investment strategy should be in writing. It should also be tailored and specific to the relevant circumstances of your fund rather than a document which just repeats the words in the legislation. Relevant circumstances may include but are not limited to personal circumstances of the members such as their age, employment status, and retirement needs, which influence your risk appetite.

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Your investment strategy is your plan for making, holding and realising assets consistent with your investment objectives and retirement goals. The superannuation laws require that you must prepare and implement an investment strategy for your self-managed super fund SMSF which you must then give effect to and review regularly. Your SMSF investment strategy should be in writing.

It should also be tailored and specific to the relevant circumstances of your fund rather than a document which just repeats the words in the legislation. Relevant circumstances may include but are not limited to personal circumstances of the members such as their age, employment status, and retirement needs, which influence your risk appetite.

In particular, under the super laws your strategy must consider the following specific factors in regard to the whole circumstances of your fund:. You also need to articulate how you plan to invest your super or why you require broad ranges to achieve your investment goals to satisfy the investment strategy requirements.

If you choose not to use allocated portions or percentages in your investment strategy, you should ensure material assets are listed in your investment strategy. You should also include the reasons why investing in those assets will achieve your retirement goals. For instance, you need to be aware of the in-house asset rules and acquisitions from related party rules.

Where your investments breach the super laws, we can take compliance action against you. Depending on the severity of the breach, we may apply penalties and potentially disqualify you as trustee. While a trustee can choose to invest all their retirement savings in one asset or asset class, certain risks such as return, volatility and liquidity risks can be minimised if a trustee chooses to invest in a variety of assets.

This is called a diversified portfolio which helps to spread investment risk. Investing the predominant share of your retirement savings in one asset or asset class can lead to concentration risk.

In this situation, your investment strategy should document that you considered the risks associated with a lack of diversification. Asset concentration risk is heightened in highly leveraged funds, such as where the trustee has used a limited recourse borrowing arrangement to acquire the asset.

This can expose members to a loss in the value of their retirement savings should the asset decline in value. It could also trigger a forced asset sale if loan covenants for example, the loan to valuation ratio are breached. Super laws also require trustees to invest in accordance with the best interest of all members. You need to be aware of any legal risks that may result from investing in one asset class. To help meet this requirement, you could consider specifying appropriate allocations or percentage or dollar ranges for each class of investment ranges that you have chosen for your strategy.

These allocations or ranges typically allow some flexibility for market fluctuations. Your strategy must articulate how you plan to invest your super in order to meet your retirement goals.

We don't consider that short term variations to your articulated investment approach, including to specified asset allocations, constitute a variation from the investment strategy. You should review your strategy regularly to ensure it continues to meet the current and future needs of your members depending on their personal circumstances. You should also review your strategy at least annually and document that you have undertaken this review and any decisions made arising from the review.

For example, you could do this as part of the annual trustee meeting minutes. You should then provide these minutes or other evidence of a review to your auditor. When conducting the annual audit on your fund, your auditor will check whether your fund has met the investment strategy requirements under the super laws for the relevant financial year.

This means they will check that:. If your auditor identifies that you have breached the investment strategy requirements then you should fix the breach. If your strategy failed to adequately address some of the factors mentioned above, such as the risk of inadequate diversification, you can fix this by attaching a signed and dated addendum to the strategy or a trustee minute which adequately addresses the requirements.

You should then show this to your auditor prior to finalisation of the audit. You should then make sure you regularly review and adhere to your new strategy in the future. For most funds, the criteria will be met if either:. If your auditor is required to lodge an ACR and the breach has not been rectified, we will ask you to rectify the breach.

The directors of a corporate trustee are jointly and severally liable to pay this penalty. We cannot assist you with preparation of your SMSF investment strategy as this could amount to the provision of financial advice. If you require assistance with the preparation of an investment strategy, you should consider seeking advice from your usual SMSF adviser or a licensed financial adviser.

Note that your usual SMSF adviser may not be a licensed financial adviser and legally capable of assisting you. They may be able to guide you on where to obtain resources such as an investment strategy template.

Take care when obtaining standard investment strategy templates as these may not satisfy the super rules. Show download pdf controls. Show print controls. Your self-managed superannuation fund SMSF investment strategy Your investment strategy is your plan for making, holding and realising assets consistent with your investment objectives and retirement goals.

Last modified: 17 Feb QC

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SMSFs (Self-managed super funds)

Your investment strategy is your plan for making, holding and realising assets consistent with your investment goals and should explain how your investments meet your retirement objectives. In response to feedback from SMSF trustees and industry last year we've updated our website to provide further guidance on what you need to consider when drafting your investment strategy, including:. Find out more about your SMSF investment strategy. Show download pdf controls. Show print controls. Your SMSF investment strategy Your investment strategy is your plan for making, holding and realising assets consistent with your investment goals and should explain how your investments meet your retirement objectives.

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