SMSF Diversification Requirements

SMSF Diversification Requirements
September 16, 2019 Toohey Reid

You may have received correspondence from the ATO entitled “Is your SMSF investment strategy meeting diversification requirements?”, which, we understand, has recently been sent to some trustees of SMSFs.

The correspondence questions whether trustees of SMSFs are satisfying their obligations under the Superannuation Laws if their investment strategy involves holding 90% or more of its funds in a single asset or in a single class of asset. The correspondence then states that trustees may be at risk of incurring an administrative penalty of $4,200 if the SMSF’s investment strategy is deficient.

Whilst SMSF trustees are under an obligation to regularly review an SMSF’s investment strategy, which includes consideration of issues such as asset diversification, liquidity, risk/return and liabilities, the fact that a particular SMSF has a narrow asset holding may well be completely consistent with its investment strategy and in compliance with the Superannuation Laws.

We have decades of experience advising clients on issues such as this, plus, we have received sign-off from the ATO permitting SMSF clients to hold single assets as part of their investment strategy.

General Advice Disclaimer

General advice warning: The advice provided is general advice only as, in preparing it we did not take into account your investment objectives, financial situation or particular needs. Before making an investment decision on the basis of this advice, you should consider how appropriate the advice is to your particular investment needs, and objectives. You should also consider the relevant Product Disclosure Statement before making any decision relating to a financial product.

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