It's time to review your investment strategy
Every Self Managed Super Fund (SMSF) must regularly plan and review its investment strategy to ensure compliance with the SIS Act, SIS regulation and ATO guidance.
These regulations state that a trustee must regularly review the whole fund and each possible investment option. It must also take into account:
The risk involved in making, holding and realising, and the likely return from the investments covered by the strategy. It must have regard for the trustee's objectives in relation to the strategy and the fund's expected cash flow requirements
The composition of the investments covered by the strategy including the risks involved
The liquidity of the investments, including the fund's expected cash flow requirements
Whether reliable valuation information is available
The fund's ability to discharge existing and prospective liabilities
The expected tax consequences
The costs that the fund might incur in relation to the investments covered by the strategy
Whether the trustee(s) should hold a contract of insurance that provides insurance cover for one or more fund members
Any other relevant matters
Failure to comply with any of these requirements could carry a penalty of up to $11,000. Once the trustee has formulated an investment strategy, the fund's investments should be consistent with that strategy.
A review of your SMSF's investment strategy must take place at least once a year and be signed off by each individual trustee or by the corporate trustee. If a review does not take place, fines will result for all trustees of the fund.
Contact us here if you need any guidance with your fund's investment strategy.