ATO letters indicate a wider SMSF warning

Letters sent by the ATO to nearly 18,000 SMSFs may serve as a warning to a far greater number of funds with similar strategies, an SMSF expert has claimed.

         

 

Letters sent by the ATO to the trustees of nearly 18,000 SMSFs may have a potential impact on, and serve as a warning to, a far greater number of funds who have invested in a single asset or asset class, an SMSF expert has claimed.

Smarter SMSF chief executive Aaron Dunn said while the ATO sent letters to the trustees of 17,700 funds the total number of SMSFs with more than 90 per cent of investments in a single asset or asset class was 180,000.

“The ATO has made people aware that nearly one third of funds have invested 90 per cent or more within a single asset or asset class and the thing that will be picked up from these letters will be the expectations that now exist around diversification and the investment strategy,” Dunn said in a webinar held yesterday.

“In my view this heightens the requirements to ensure the investment strategy documents do spend more time satisfying the audit process and the regulator as to how the diversification requirement is satisfied by that single asset class, and this is not just for property investments or property with an LRBA but where a fund has any heavy asset allocation.”

Dunn said the letter writing campaign was a targeted approach but was bringing a wider awareness of investment strategy requirements to the SMSF market for trustees as well as for auditors.

He pointed to the letters also being sent to auditors by the ATO and legal cases, such as Cam & Bear and Baumgartner, as demonstrating auditors were also open to higher levels of exposure in relation to inadequate investment strategies.

“What are going to be the expectations of auditors in making sure trustees have complied with Superannuation Industry (Supervision) Regulation 4.09?,” Dunn said.

“Which is why I go back to the 180,000 figure because auditors are going to be spending more time looking at same set of principles and considerations for all funds that have heavy asset concentration and looking to improve the documented decisions for diversification.”

 

 

Jason Spits
September 26, 2019
smsmagazine.com.au

 

More Articles

Why crypto treads an uncertain path through tax minefield

The taxation of digital assets used for lending and borrowing would benefit from clear-sighted...

Read full article

Wheat Production by Country

Check out the countries that produce the most...

Read full article

Labor tweaks stage 3 tax cuts to make room for ‘middle Australia’

Following years of mixed messaging, Labor has bowed to economic pressure and announced changes to its stage...

Read full article

Investment and economic outlook, January 2024

Region-by-region economic outlook and latest forecasts for investment returns. . What might shipping...

Read full article

Quarterly reporting regime means communication now paramount: expert

Communication between SMSF trustees, accountants and advisers is more crucial than ever with the quarterly...

Read full article

Four timeless principles for investing success

Investing success can mean different things to different people. Being clear on what success means for you is...

Read full article

Plan now to take advantage of 5-year carry forward rule: expert

This is the last year that the five-year catch-up contribution rules for concessional contributions can be...

Read full article

Super literacy low for cash-strapped

Financial literacy around superannuation is poor for many lower-income people, who still question why they...

Read full article

Sofie Korac is an Authorised Representative (No. 400164) of Prudentia Financial Planning Pty Ltd, AFSL 544118 and a member of the Association of Financial Advisers.

Financial Advice Sydney and the North Shore Office based in Gordon NSW

Financial Services Guide - Disclaimer & Privacy Policy

^