ATO rules out strategy wording

ATO investment strategy wording

While demand for specific SMSF investment strategy wording from the ATO is high, trustees will not be receiving this type of regulatory assistance.

The ATO has confirmed it will not be providing specific wording for an SMSF investment strategy even though there has been high demand among trustees for it to do so.

“We’re often asked about specific wording that should be included in an investment strategy. For example, should it have percentages in terms of asset classes and should it specify certain objectives such as setting specific rates of return,” ATO superannuation and employer obligations director Paul Delahunty shared with attendees at the recent SMSF Auditors Association of Australia Conference held in Sydney.

“Our view on this is ultimately the specific wording and detail in an investment strategy will be up to the trustees and will depend on their personal circumstances.”

Delahunty pointed out superannuation legislation dictates SMSF trustees must formulate an investment strategy for their funds that has regard to the entire circumstances.

To this end, these individuals are the most well equipped to fulfil this requirement.

However, Delahunty indicated the regulator’s reluctance to provide specific wording for an investment strategy did not mean it is unwilling to give SMSF trustees assistance in complying with their legal obligation in this area regarding both what to do and what to avoid doing.

“Our advice to help trustees in this situation is to consider specifying appropriate allocations and percentages or dollar ranges in each class of investment,” he said.

“We do suggest that trustees steer clear of including broad investment ranges such as between zero and 100 per cent for a broad range of assets because this would not reflect proper consideration in satisfying the investment strategy requirement.

“We have published web content that provides a pretty clear direction on what an investment strategy must consider under the requirement of regulation 4.09 of the SIS (Superannuation Industry (Supervision)) [Regulations].”

He emphasised the importance of taking into account the level of diversification a fund’s asset holdings reflect and the issue of concentration risk.


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