ATO, Investments

ATO letters’ impact already evident

ATO letters’ impact already evident

A specialist document provider has revealed many trustees have been reassessing their SMSF investment strategies as a result of the ATO’s query letter to 17,700 SMSFs invested in a single asset or asset class.

The letters the ATO has sent out to 17,700 SMSFs with investments in a single asset or asset class is already having an effect with many trustees currently making the decision to revisit their SMSF investment strategies to ensure they comply with Superannuation Industry Supervision Regulation (SISR) 4.09, a sector document provider has said.

“We’ve had a huge amount of interest on how to deal with this and we’ve just recently updated our investment strategy document online for our members to be able to build the templates. I think we’ve had more of those created in the last few weeks than we’ve had with any other document,” Smarter SMSF director Aaron Dunn revealed while presenting his latest webinar last week.

“So it’s clearly provided a bit of a reset moment I think to make sure that this is all done properly and not simply looked at as a compliance document,” he added.

Dunn made it clear the regulator is not saying an SMSF cannot just hold a single asset in its investment portfolio via its letter.

“What the ATO wants trustees to focus on is how they have come to that conclusion. It’s not that they can’t do that but how have they come to the conclusion that they believe it is appropriate for all the members of the fund,” he explained.

“So this is where the ATO is making sure trustees understand all of those key requirements [outlined in SISR 4.09].”

Dunn acknowledged the regulator had been very transparent about its communications with SMSF auditors on the subject as well as the significance of this course of action.

“If the auditor cannot be satisfied, which also means that the ATO would not be satisfied here, that [the trustees] have adequately considered diversification then of course the administrative penalties could be applied around that operating standard,” he said.

Up to 20 administrative penalty units per trustee can be assigned for this type of breach with a fine of $210 per unit, Dunn warned.

The ATO sent out the letters scrutinising the investment strategies of 17,700 SMSFs in early September.

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