Who control the investments of the SMSF?

The trustees are the account holder and hold the investments for the SMSF. The trustees operate the bank account and other investment accounts.

You may provide authority to your financial adviser to manage the accounts for the SMSF if you have a financial adviser.

What is an investment strategy?

An investment strategy is a document formulated by the trustee that must include:

• the risk involved in making, holding and realising, and the likely return from, the SMSF’s investments, having regard to its objectives and expected cash flow requirements;
• the composition of the SMSF's investments as a whole, including the extent to which they are diverse or involve exposure of the entity to risks from inadequate diversification;
• the liquidity of the SMSF's investments, having regard to its expected cash flow requirements;
• the ability of the SMSF to discharge its existing and prospective liabilities;
• whether the trustees of the SMSF should hold a contract of insurance that provides insurance cover for one or more members of the SMSF.

It is mandatory for the trustee to formulate and give effect to an investment strategy.

How often do I need to review the investment strategy?

Trustees are required by law to review the investment strategy regularly. Regularly is not defined. The ATO has indicated that ‘regularly’ means at least once every 12 months. You may review the investment strategy more regularly.

A review does not necessitate a change to the investment strategy, as long as it is still relevant and suitable.

Is life insurance mandatory in SMSF?

Life insurance in not mandatory for SMSF, but the SMSF is required to consider life insurance as part of the fund’s investment strategy.

What name should be used when opening an account for the SMSF?

The account should be held in the name of the SMSF and be distinguishable from trustees own assets –
«trustee name» as trustee for «SMSF name»
For example, John Citizen and Jane Citizen as trustee for Citizen Super Fund

Can SMSF invest in residential property?

SMSF can invest in residential property. However, there are certain restrictions:

• the property cannot be purchase from a trustee or member, their spouse or relatives, or entities related to them
• the property cannot be leased to a trustee or member, their spouse or relatives, or entities related to them.

Is it possible to purchase a real property off-the-plan?

A SMSF may purchase a property off-the-plan. However, if the trustee is partly funding the purchase on settlement with borrowings, the purchase must be structure for the limited recourse borrowing arrangement. The structure should be arranged at the time of the purchase, not at settlement.

Can SMSF borrow to real property?

A SMSF may borrow to fund the purchase a real property. The correct structure will need to be in place prior to entering any agreement to purchase.

Note that SMSF cannot borrow generally. The borrowing to purchase a real property is a specific exception and must be correctly structured. See Limited recourse borrowing arrangement.

Can SMSF purchase commercial property?

SMSF can purchase commercial property. SMSF may purchase a property that is used wholly and exclusively by a business from a member of the SMSF or related party. The business does not need to be a business related to a member of the SMSF. The acquisition must be on arm's length basis, and at market value. See Acquiring commercial property from related party.

Can I sell my property used in my business to my SMSF?

SMSF may purchase a property that is used wholly and exclusively by a business from a member of the SMSF or related party. The acquisition must be on arm's length basis, and at market value.

The property may be leased to a business related to a member of the SMSF or related party on arm's length terms, including the amount and frequency of rent payment. There must be a written lease agreement.

See Acquiring commercial property from related party.

Can a SMSF invest in my business?

No, a SMSF cannot invest in a member's business or related person's business. Similarly, generally, a SMSF cannot run a business.

Can a SMSF buy shares in a private company?

SMSF is not prohibited from making investments (acquiring shares) in a private company as long as the company is not considered an 'in-house asset'. Briefly, an in-house asset includes an investment in a related party or entity of the SMSF. Related party is widely defined. Get advice before making investments in a private company.

Can SMSF make investments overseas?

SMSF may invest overseas, such as shares listed on an overseas stock exchange. Any assets must be properly held seperately from the trustees' own assets. The assets should clearly evidence the SMSF's ownership.

Is is permitted for a SMSF to make loans?

SMSF trustee is prohibited from lending money, or providing any other financial assistance using the resources of the SMSF, to a member of the SMSF or a relative of a member of the SMSF.

What if the loan is made to an unrelated person? Although it is not prohibited, the loan must be conducted on a commercial, arm's length basis - such as evaluation of borrower creditworthiness, security as collateral for the loan, rate of interest, term of loan, repayment, and action for default. Loans made by SMSF will generally draws the attention of the ATO. The ATO is concerned with the closeness of the trustee's relationship with the borrower. Get advice before entering into loan arrangements.

Can SMSF invest in cryptocurrencies?

The ATO has stated that SMSFs are not prohibited from investing in cryptocurrencies as long as:

• be allowed for under the SMSF's trust deed
• be in accordance with the SMSF's investment strategy
• comply with SISA and SISR regulatory requirements concerning investment restrictions – such as meeting the sole purpose test and not acquiring the cryptocurrencies from related party.

The ATO also requires that the SMSF’s cryptocurrency investments be held and managed separately from the personal or business investments of trustees and members. This includes ensuring the SMSF has clear ownership of the cryptocurrency. This means the SMSF must maintain and be able to provide evidence of a separate cryptocurrency wallet for the SMSF from that used by trustees and members personally.

Can I instruct Superannuation Accounting Services to transact on my behalf?

Superannuation Accounting Services will not transact on any of your account. We do not provide any services to attend to transacting on any of your account.

What records do I need to keep?

To provide evidence for your investment transactions, you need to keep records that can explain the transactions. This includes bank statements and documents relating to transactions, such as purchase or disposal documentation. The records may be kept electronically.

Source documentation is almost always required. For example, bank statement or electronic bank statement as oppose to a download of transactions from internet banking.