ATO letters should spark trustee education

ATO SMSF investment strategies

ATO letters examining SMSF investment strategies should lead to advisers educating trustees on their responsibilities, an SMSF expert says.

ATO letters issued recently to SMSF trustees examining their investment strategies regarding diversification should be used as a starting point by auditors and advisers to educate trustees on their responsibilities in this area, an SMSF audit expert has said.

Ernst & Young executive director Matina Moffitt said even though trustees were ultimately responsible for their SMSF investment strategy and should be the ones to write it, it would be accountants and financial planners writing and assisting trustees with this exercise.

A need to educate trustees and advise them that the investment strategy of their SMSF was ultimately their responsibility was a driving force behind the ATO letters, Moffitt said.

“This is an opportunity for some sectors of our industry to actually assist trustees and to educate them, to sit down with them and to take the opportunity, because if a trustee receives this letter, the first thing they will do is call up their [financial advice] provider and say: ‘What in the world is this and what do I have to do with it?’” she said at the recent Chartered Accountants Australia and New Zealand National SMSF Conference 2019 in Sydney.

“This is an opportunity to have those discussions with the trustee.”

She also highlighted the inadequacies of the widely used template for SMSF investment strategies.

“[The current] template-type of investment strategy is pretty much on the way out is my view,” she noted.

“[This] is not going to be sufficient anymore. We’re actually going to be heading into a year where I think the industry will have to develop and kind of devise where we are going to land on this.

“It is going to be an area where [investment strategies] are going to have to be more customised and the trustees will need to be involved.”

The ATO has not indicated if it would run a similar campaign again among SMSF trustees stating the campaign run earlier this year had increased trustee awareness around their obligations.

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