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
Partner
+61 3 9258 3673
leigh.baring@maddocks.com.au
Qualifications: LLB (Hons), BEc (Hons), Monash University
Leigh is a Partner in Maddocks Tax and Structuring team. Leigh has extensive experience in advising Australian and multinational companies, high net worth individuals, accountants and financial advisers on all areas of taxation law.
Leigh regularly provides advice on:
- structuring of businesses and transactions,
- mergers and acquisitions,
- corporate reorganisations and distributions,
- sale of businesses,
- demergers,
- capital raisings,
- joint ventures and property developments,
- international tax (both inbound and outbound), and
- succession planning and liquidations.
His advice covers both direct and indirect tax considerations.
Throughout his career, Leigh has been at the forefront in developing tax-effective corporate, trust and superannuation structures.
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