SMSF trustees cannot have their investment strategies assessed by the ATO as its officers are not able to undertake that task, an SMSF document provider has claimed.
The ATO will, however, assess whether trustees have adopted and then implemented the documented strategy by examining the fund’s records, SuperCentral stated in an update on its website.
The firm weighed into the ongoing discussion around the purpose and intent of the letters sent by the ATO to 17,700 trustees in August stating there were no restrictions under general law prohibiting SMSFs from investing in a single asset.
There were, however, restrictions under the Superannuation Industry (Supervision) (SIS) Act and Regulations that require SMSFs to formulate, regularly review, and give effect to an appropriate strategy.
“The formulation requirement will be satisfied if the trustees document their investment strategy. This entails the investment strategy being written down and adopted by the trustees,” SuperCentral stated.
The firm added the formulation requirement can be satisfied by the existence of a resolution approving the strategy, and the implementation requirement can be satisfied if the investments of the superannuation fund comply with the adopted strategy.
SuperCentral added it was these latter issues the ATO is considering as it has no power to question the actual investments of an individual fund or trustee.
“The ATO it not a licensed investment adviser. Its officers are not qualified to pass a judgement on the investment strategy of an SMSF,” the service provider said.
The firm added despite this “the ATO and its officers can assess whether an SMSF has adopted a particular investment strategy – because there may be no document in the possession of the trustees which has that title – and there may be resolutions or minutes to that effect”.
SuperCentral also warned trustees that, as part of that assessment, the ATO can determine if the strategy has been implemented.
“This can be assessed by the mismatch between the asset classes of the adopted investment strategy and the actual investment classes of the investments portfolio.”
