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The ATO is cracking down on SMSF investment strategies

How compliant are your clients?

At the heart of your client’s SMSF is their investment strategy. It’s why they wanted to manage their own super. They believed they could do a better job.

At the heart of superannuation is the ability for Australians to provide for a happy retirement. To have financial independence and enjoy their golden years. As they want.

It’s why the ATO is so vigilant about SMSFs. Will they achieve their intended purpose? And without an investment strategy that is unlikely.

ATO data-driven crackdown

The ATO has invested billions into its data matching capabilities. Using it as a tool to drive compliance and identify breaches across business and private lives.

SMSFs are no different.

The first of many “polite enquiries”: asset concentration.

The ATO is writing to the trustees and auditors of 17,700 SMSFs which have 90% or more of their assets in a single asset class. To verify that they have a properly considered investment strategy.

Trustee legal obligations

Your clients have a legal obligation in formulating their investment strategy to consider

  • Composition of the fund – how diverse is it, and the level of risk in being too concentrated
  • Risk involved in making, holding and realising investments.
  • The level of liquidity needed to pay expenses and benefits
  • Whether the fund should hold a contract of insurance for one or more of the members.

You know that there will be polite enquiries about these areas too in the future.

Increasing litigious nature of trustees

And if that wasn’t enough, the courts are quite happy to shift the burden of responsibility for SMSFs compliance onto the associated advisors. Which include you.

Need Help?

If you have concerns about your client’s investment strategy, give TriSuper Auditors a call on 1300 TRISUP. Let’s get your client’s records in order before the audit and before the ATO takes a look.

Contact TriSuper Auditors on 1300 TRISUP or visit our website for further information.