Super trustees could be hit with $4k penalty

Superannuation fund trustees could be hit by a $4,200 penalty as the Australian Taxation Office (ATO) focuses on auditing investment strategies, the SMSF Alliance warns.

The ATO has requested over 17,000 funds provide evidence their investment strategy meets the retirement objectives and cashflow requirements of the fund, especially those with 90% of more of its funds invested in a single asset class.

SMSF Alliance principal and SMSF specialist mentor, David Busoli, said this would give auditors a reason to pay more attention to the investment strategies of all other funds as well.

“The ATO seem to be prepared to overlook breaches where funds have already been audited as the letter specifically states ‘Have your investment strategy ready to provide to your SMSF's approved auditor as part of your next audit’,” he said.

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Busoli warned that if the auditor identified the fund had failed to rectify any non-compliance with the requirements it could result in a penalty.

However, Busoli has previously said that diversification had to be “considered” but did not mean it must be “achieved”.

“If it has been properly considered, and its absence justified, the rules are satisfied,” he said.

“The problem with some investment strategies is that they are little more than a regurgitation of the requirements, a statement that they have been considered and an asset allocation that is meaningless, such as 0% to 100% in any asset.”