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ATO investment strategy guidance ‘unnecessary’: SUPERCentral


The recent SMSF investment strategy guidelines provided by the Australian Taxation Office are “unnecessary” as they effectively tell trustees what they are already telling themselves to do, argues SUPERCentral.

By Adrian Flores2 minute read

The guidance, which was released by the ATO last week, advised SMSF trustees to set out why and how they’ve chosen to invest their retirement benefits in order to meet their goals.


In a recent blog post, SUPERCentral noted that members of SMSFs are keen to maximise their returns and have proven year after year that they can do so equally as well as public offer funds.

“There is no need for an SMSF to have an investment strategy, which is effectively the trustee/members telling themselves what to do,” it said.

“The closely held nature of the investments by the trustee/members ensures that they will do all they can to bolster their fund’s returns so as to provide adequate financial support later in life.”

As a result, SUPERCentral said it can be argued that, in the self-managed context, investment guidelines are unnecessary.

“It is all very well for the regulator to say that if the fund loses money then the government will have to pick up the tab through increased social security payments during the member’s retirement. The fact is that no one wants to rely purely on the aged pension,” it continued.

Further, SUPERCentral said that while the adoption of a tailor-made investment strategy approach by the ATO will necessitate changes in some industry practices, a “one size fits all” template is unlikely to deliver the required results.

It also said financial advisers may potentially add value by their facilitation with the clients’ SMSF investment strategy formulation and review under the new guidelines.

“It has to be borne in mind that the ATO is not a prudential regulator and does not review the merits and suitability of the investments in an investment strategy. The investment strategy covenant in the SIS Act is an operating standard (SIS Regulation 4.09[1]). The ATO will assess whether the trustee has complied with legislation in the formulation, review and implementation of the strategy,” SUPERCentral said.

“In addition, a properly formulated investment strategy is also a defence and will provide an appropriate level of protection for the trustees and advisers should the investment fail, against actions that might be taken by any person ‘who suffers loss or damage’ as a result (Section 55[5] SIS Act).”

ATO investment strategy guidance ‘unnecessary’: SUPERCentral
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