SMSF trustees no longer need to specifically address the use of reserves in the investment strategy of their funds.
“One thing that is important is under the old laws if you had reserves, you had to have a risk management strategy, or a management strategy, for reserves, but that now has been dropped,” NowInfinity principal Grant Abbott told delegates at the selfmanagedsuper NowInfinity SMSF Strategies Day in Perth last week.
“So if you use reserves, they are swept up in the ordinary investment strategy. You don’t need to do a specific investment strategy for them anymore.”
While addressing the changes to the investment strategy rules, Abbott also pointed out there was no longer any need to consider trauma insurance for any members of an SMSF when assessing the risk cover needs for each member.
“If you didn’t have trauma cover for members in an SMSF before 30 June this year, you can’t now put that insurance into the fund because the cover has to link to a condition of release and there is no condition of release for trauma insurance,” he said.
However, he said having trauma cover could still be advantageous for members if the insurance had been included in the fund before the specified deadline.
“If you had trauma insurance in the fund prior to 30 June, you can increase or decrease the value of the event insured,” he said.
Despite the fact new trauma policies can no longer be taken out within an SMSF, he stressed that was not the case for temporary or permanent disablement insurance.
“In regard to incapacity, there is a condition of release for these policies,” he said.
