The ATO are concerned that the trustees of these Self-Managed Super Fund’s haven’t given due consideration in diversifying their fund’s investments which may put their fund’s assets at risk.
The ATO has sent letters to trustees and auditors of SMSF’s where their records indicate the SMSF may be holding 90% or more of the fund in one asset class. They are concerned that the trustees of these SMSF’s haven’t given due consideration in diversifying their fund’s investments which may put their fund’s assets at risk.
The letter asks that the trustee’s of these SMSF’s provide their auditor with evidence of how they considered their investment strategy meets the following requirements:
- the diversification of fund investments
- the risks of inadequate diversification within the context of the SMSF’s investment portfolio
- the making, holding, realising and the likely return from their fund investments relating to their retirement objectives and expected cash flow requirements
- the liquidity of their investments, allowing the fund to meet costs and pay benefits as members retire
- whether insurance cover should be held for one or more members
The letter also indicates that a penalty of $4,200 will apply for SMSF’s that fail to meet the above requirements.
If you receive this letter, please do not be alarmed as its purpose is to coerce you as a trustee to review your investment strategy and to consider diversification. Your current investment strategy has been audited and is fully compliant. However, this should be reviewed on an ongoing basis. If you have any concerns, please do not hesitate to contact our office.
This is general information only. No investment advice has been provided to you. The information in this blog is general information only and has been prepared without taking into account your personal objectives, financial information and needs. You should consider any advice in this blog in light of your personal objectives, financial situation or needs before acting on it. You may wish to consult an accountant and or licensed financial adviser to do this. Hailston + Co assumes no responsibility for any actions you take independently, and without seeking professional advice from your accountant or licensed financial advisor.