This article is more than 24 months old and is now archived. This article has not been updated to reflect any changes to the law.
A recent article in the Australian Financial Review reported on the increasing popularity of exchange traded funds (ETFs) as an investment option for SMSFs.
Trustees should be aware that if they intentionally or even accidentally invest in an asset type not permitted under the fund's investment strategy, the trustees will be in contravention of the investment strategy and, likely, the governing rules of the SMSF.
Aside from the legislative requirement, this highlights the importance of regularly reviewing a fund's investment strategy.
Cassandra Townsend, Thomson ReutersIn our earlier ClearLaw article titled "The importance of a comprehensive SMSF investment strategy", our lawyers at Maddocks outlined the SIS Act and Regulations requirements around SMSF investment strategies.
Under the law, a trustee must regularly review the fund's investment strategy. If a fund's investments are not consistent with that strategy, the trustee can:
- dispose of that asset and where appropriate, reinvest those funds in a permitted investment; or
- amend the SMSF's investment strategy to permit them to invest in that particular investment provided that it is in the best interests of the SMSF, and have the SMSF's members approve these arrangements.
You can read about how to vary your fund's investment strategy on our website.
More Cleardocs information on related topics
You can read earlier ClearLaw articles on a range of SMSF topics.
Order SMSF related document packages
- Set up an SMSF investment strategy
- Set up an SMSF pension
- Arrange SMSF borrowing documents:
- Set up an SMSF
- Set up an SMSF corporate trustee
- Update an SMSF deed
Lawyer in Profile
Senior Associate
+61 3 9258 3819
jack.coventry@maddocks.com.au
Qualifications: BA (Philosophy), Monash University, JD (Juris Doctor), University of Melbourne
Jack is a member of Maddocks Commercial team. He advises a range of corporate and private clients on:
- M&A transactions,
- corporate reorganisations, and
- legal and tax structuring.
Jack acts for clients on both buy-side and sell-side and specialises in founder-owned businesses and Australian subsidiaries of multi-national companies. He works across a number of sectors including information technology, professional services, and property development and management including land lease.
Jack's structuring work includes assisting multinationals to structure Australian operations, listed companies to achieve regulatory compliance / optimisation and providing general tax structuring. He has also represented clients in tax controversies including before the General Anti-Avoidance Review Panel (GAAR Panel) and the Federal Court of Australia.
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