Earlier this month, the ATO announced it would be writing to 17,700 SMSF trustees who have more than 90 per cent of their assets in a single asset class and their auditors.
In an online update, the ATO said it will be contacting the 17,700 SMSF trustees and their auditors at the end of this month where its records indicate the SMSF may be holding 90 per cent or more of its funds in an asset or a single asset class.
The ATO stated that it will be asking these trustees to “review their investment strategy and clearly document the reasons behind the investment decisions”.
“We’ll also ask trustees to have their documentation ready for their SMSF’s approved auditor for their next audit to help the auditor form an opinion on the fund’s compliance with these requirements,” the ATO stated.
The ATO said it is concerned that some of these trustees haven’t given due consideration to diversifying their fund’s investments; this can put the fund’s assets at risk.
“Lack of diversification or concentration risk can expose the SMSF and its members to unnecessary risk if a significant investment fails,” it said.
Can I just check with Chris Jordan that the ATO have the apprioriate AFSL to be giving the Trustees investment advice, and that they completed the appriroiate fact find, and have also provided the Trustrees with an SOA before advising them of this fact – because that is what they are doing aren’t they – giving investment advice?
Or are they just giving general non specific advice, and we can therefore all do this for trustees?
Lack of diversification or concentration risk can expose the SMSF and its members to unnecessary risk if a significant investment fails.
How could a 100% investment in cash held by an Australian bank fail???
Complete waste of time & resources that could be better used elsewhere by the ATO. This is already being signed off by the Auditors of every SMSF – it’s already in the standards to check the Fund has an investment strategy that’s in line with the investments being undertaken, and that there’s some evidence of it having been reviewed regularly. If the ATO no longer trusts Auditor’s to do their job why bother getting SMSFs audited at all? Diversification also shouldn’t just include the SMSF – many people may have the SMSF solely to invest in 1 asset type/class because they already have plenty of other asset types/classes in other entities/their own name.
Hey Orsen, it’s your Big Brother calling, he wants your free will back…
Pity the ATO/ASIC/APRA aren’t as worried over some of the dubious asset allocation decisions and definitions industry funds have placed, endangering a far wider tranche of Aussie wealth and retirement prospects.
I am assuming this also includes Trustees investing solely in cash?
ATO mind your own business. there reason for lack of diversity can be for any number of reasons. Brig Brother out of control!!!
I am assuming this also includes Trustees investing solely in cash?