SMSF Investment Strategy – Additional Requirements

Recent changes to the SIS Act effective from 1 July 2012 require trustees of SMSF’s to undertake the following:

1.Consider insurance for their members as part of the fund’s investment strategy;

This does not require life insurance to be included in every Fund but it does mean that the Investment strategy should show that the matter has been appropriately considered.

2. Money and other assets of an SMSF be kept separate from those held by a trustee personally and by a standard employer-sponsor or an associate of a standard employer-sponsor;

This is not new but it is now an operating standard which gives the ATO greater enforcement powers.

3. SMSF assets must be valued at market value for reporting purposes.

This is an ATO guideline that we have always abided by however now it is a formality that is not negotiable.

Trustees, administrators and auditors have in the main are already been complying with points 2 & 3 and should be the normal practice for most Funds. It is the need for trustees to consider life insurance which will require the Fund’s investment strategy to be modified to reflect this.

Auditors will require that Investment Strategies for 2012-2013 financial year meet this requirement.