Does your SMSF currently only have single major asset? You could be catching the eye of the ATO.
If your Self-Managed Super Fund (SMSF) is holding just one major asset, like a property or even cryptocurrency, you might be attracting the ATO’s attention. Their concern? That having all your “eggs in one basket” could be risky and not diversified enough.
But here’s the thing, and it’s not going to be news to anybody. The ATO are wrong, quite often!
We’ve seen and advised many of our own clients with only one significant asset, plus some cash. Ordinarily, this asset will be either a commercial or residential property, but we are also seeing more unconventional investments like cryptocurrency or coins. Regardless of what the SMSF looks like, these clients have carefully considered their investment choices. They’ve usually worked closely with us to understand and manage the risks involved.
Since it’s a “Self-Managed” Fund, the only thing that is required of Trustees is that they not only take into account, but document investment risk, diversification, and liquidity. This is where an Investment Policy Statement (IPS) comes in. An IPS is a detailed document that outlines your fund’s investment strategy, including risk tolerance, investment goals, and how you plan to achieve them. It provides a clear, structured approach to managing investments and ensures that all decisions are aligned with the fund’s objectives and compliance requirements.
To cover potential risks, you might use insurance to manage liquidity gaps or set up estate planning strategies like reversionary pensions to ensure the asset stays in the SMSF in the event of the death of a Trustee.
As always with managing your SMSF, the devil is in the detail! Crafting a robust and well thought out IPS is a must do for any Trustee considering holding a single asset portfolio.
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The material and contents provided in this publication are general and informative in nature only. It is not intended to be advice and you should not act specifically on the basis of this information alone. If expert assistance is required, professional advice should be obtained.
