SMSF Investment Strategy Regulation Change

The Australian Taxation Office (ATO) has introduced measures on 7^th August 2012 as part of the suite of measures announced within the Stronger Super legislation. These measures are intended to address potential risks and strengthen the regulatory framework in which self-managed superannuation funds (SMSFs) operate. In short, these measures mean that all self-managed superannuation funds are required to:

• conduct a review of the fund's investment strategy on a regular basic
• consider insurance for fund members as part of the fund's investment strategy
• value the fund's assets at market value for the purposes of preparing financial accounts and statements

The obligation requires money and other assets of the fund to be kept separate from any money or assets held personally by the trustee or by a standard employer-sponsor or an associated standard employer-sponsor is now a prescribed operating standard. Therefore ensure they are complied with at all times. The ATO has the power to enforce compliance of these operating standards.

What this means for trustees

During each income year from 2012-13, you must review your fund's investment strategy to ensure it continues to reflect the purpose and circumstances of your fund and its members. These reviews should occur on a regular basis and could be evidenced by documenting decisions made in the minutes of meetings held during the income year. Insurance should be considered for all members.

All assets will need to be revalued to their market value for the first time in the SMSF in the 2012-13 income year.

How we will help?

Investment Strategies of the past have documented the needs of your changing circumstances and life-stages but have not considered insurance for the fund members as part of that investment strategy. In order to satisfy the regulation we intend to review and input this new requirement into the Investment Strategies for all our clients.

The auditor of your fund will be required to review the investment strategy to provide an unqualified audit report moving forward.

We can also provide you with guidance relating to meeting your compliance requirements to value your fund assets at market value for the 2012-13 year accounts and statements.