ATO requirement for SMSF to urgently review their Investment Strategies for FY2020

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An important message for our SMSF Trustee clients.

The ATO have recently released in March 2020, specific guidance in relation to the requirements for SMSF to have a relevant and up to date Investment Strategy.   The ATO considers that an SMSF investment strategy must be reviewed regularly at least annually but also in the case of significant events such as major market correction and volatilities.

Furthermore the ATO has stated that where the assets of an SMSF or the level of investment in those assets fall outside of the scope of your investment strategy, action would be expected to be taken to address the situation, which could involve adjustments to investments or updating your investment strategy

Specifically, we have been advised that they will be closely reviewing funds with  Investment strategies that are “generic” and do not meet the ATO’s specified guidelines.

Your SMSF Investment Strategy is your plan for making, holding and realising assets, consistent with your investment objectives and retirement goals. It should set out why and how you’ve chosen to invest your retirement benefits, in order to meet these goals.  

The SIS laws require that you must prepare and implement an investment strategy for your SMSF which you must then give effect to maintain and review regularly.

This recent guidance from the ATO indicates that your investment strategy must explain how your investments meet each member’s retirement objectives, how it should be maintained moving forward, but most significantly that an updated investment strategy must be provided for the 2020 audit or our Auditors may be required to report the issue to the ATO in an Auditor Contravention Report.

We will provide further individual correspondence to those funds which our Auditors have identified specifically for FY2020 review, however it is important for all our SMSF client to ensure your Investment Strategy is compliant and up to date..

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