6 September 2019
The ATO are intending to contact about 17,700 self-managed super fund (SMSF) trustees and their auditors where records indicate the SMSF may be holding 90% or more of its funds in one asset or a single asset class. The ATO wish to ensure trustees have given due consideration to diversifying their fund’s investments and the risks associated with a lack of diversification. Lack of diversification or concentration risk can expose the SMSF and its members to unnecessary risk if a significant investment fails.
The ATO media release does not indicate they are targeting particular asset classes, however, it is likely the action will focus around funds where assets are concentrated in real property.
If you do receive a letter from the ATO regarding your SMSF’s investment strategy meeting the diversification requirements please contact your accountant or our super team. We will review your investment strategy to ensure the documentation meets the diversification requirements.
If you require further information regarding the requirements of your SMSF’s investment strategy click here.