SMSF Investment Strategy Revamp

/files/9414/0972/5179/SMSF-Investment-Strategy-Revamp.jpg

Trustees of an SMSF must now pay more ongoing attention to their SMSF investment strategy.

The new superannuation regulations require Superfund trustees to

  • Review their investment strategy on a regular basis
  • Consider which insurance policies for members are appropriate
  • Value fund assets at market value

The New Regulations amend the Superannuation Industry (Supervision) Regulations 1994 (SIS Regulations) as part of the Strong Super reforms which were designed to make the superannuation system stronger and more efficient.

Review the investment strategy on a regular basis

The trustees of an SMSF must now review the fund's investment strategy on a regular basis. The meaning of ‘regular’ has not been defined. However, we have taken the view that this review should be conducted on an annual basis.

Consider which insurance policies for members are appropriate

The SMSF’s must now consider “whether the trustees of the fund should hold a contract of insurance that provides insurance cover for one or more members of the fund.”

The legislation makes no specific mention of life and TPD, and a wider definition has been used. For example, if a building is an investment in an SMSF, then building insurance should be considered as part of the investment strategy as it affects the ability of the fund to pay a pension if the building burns down and is underinsured. Also, audit protection insurance and other more obscure insurances may also need to be considered.

Value fund assets at market value

Fund assets should be reported at market value, although typically there is no obligation to use an independent valuer. Each year, the reported value of assets should change (unless the trustees can demonstrate that the market value has remained exactly the same since last June 30.

This will most likely affect trustees with investment strategies that currently require a review of the market value of their commercial or residential buildings every 3 years. Now, an annual curbside valuation is likely required.

Talk To An SMSF Accountant

As a result, all SMSF investment strategies must change. Hillyer Riches investment strategy kit caters for these legislative amendments, which we will be updating for our clients over coming weeks.

btn_freeconsultation.jpg 

Hillyer Riches is a specialist SMSF accountant based in Caulfield, Melbourne. For more information email travis@hillyerriches.com.au.

This article is for general information only and should not be relied upon without first seeking advice from an appropriately qualified professional.

Tax Rates 2019...

Aug 7, 2018

Tax Rates 2018...

Jul 2, 2018

Lawyers...

Sep 10, 2012

Accounting...

Apr 19, 2012

Business Advisory...

Apr 19, 2012

Taxation...

Apr 18, 2012