SMSF annual return (accumulation phase)
* SMSF Annual Statement
* Profit & Loss Statement
* Member Statements
* Investment Reports
* Trustee Resolutions & Minutes
$550 ( inc GST)
* SMSF Indipendent audit
$330 ( inc GST)

SMSF Investings

10 July 2020 update

You need to manage your fund’s investments in the best interests of fund members and in accordance with the law. And you need to separate your fund's investments from the personal and business affairs of fund members, including your own.

Find out about:

>  Your investment strategy
>  Sole purpose test
>  Ownership and protection of assets
>  Restrictions on investments
>  Carrying on a business in an SMSF
>  Tax on income

Your investment strategy

A Self Managed Super Fund investment strategy is essential.
An investment strategy that you regularly review is not just a requirement under super laws ?it will help you grow your retirement savings.

It's important to consider the age, employment and retirement needs of your SMSF members.
What level of risk is in your investments, and is this appropriate for the members at this stage of their lives?

Having a variety of investments helps to spread investment risk ?it helps to not have all your eggs in one basket.
Your fund needs ready access to cash so it can pay administrative expenses, income tax and minimum income stream payments when they are due.... So it's probably best not to have all of your fund investments in fixed assets such as property.

Consider the insurance needs of all members. You also need to consider who will be the beneficiary of the insurance.
Keep in mind the investment strategy is not something you just set and forget ?it needs to be regularly reviewed to ensure it continues to meet the current and future needs of members.

There are events during the life of your SMSF that should prompt you to review the investment strategy.
Including? when a new member joins or a member leaves the fund, or the fund starts paying an income stream to a member.

This may also be a good time to think about whether an SMSF is still right for you.

You don't need to make changes every time you review your investment strategy, but you should document the review and any decisions made so your SMSF auditor can see youe met your obligations.

There are penalties for failing to keep records which trustees have to pay out of their own pocket!
You can seek professional advice to help with your investment strategy, but remember as trustee you are still ultimately responsible for your fund investment decisions.

Sole purpose test

Your SMSF needs to meet the sole purpose test to be eligible for the tax concessions normally available to super funds. This means your fund needs to be maintained for the sole purpose of providing retirement benefits to your members, or to their dependants if a member dies before retirement.

Contravening the sole purpose test is very serious. In addition to the fund losing its concessional tax treatment, trustees could face civil and criminal penalties.

It’s likely your fund will not meet the sole purpose test if you or anyone else, directly or indirectly, obtains a financial benefit when making investment decisions and arrangements (other than increasing the return to your fund).

When investing in collectables such as art or wine, you need to make sure that SMSF members don’t have use of, or access to, the assets of the SMSF.

Your fund fails the sole purpose test if it provides a pre-retirement benefit to someone – for example, personal use of a fund asset.

Ownership and protection of assets

You need to manage your fund’s investments separately from the personal or business investments of members, including your own. This includes ensuring the fund has clear ownership of its investment assets.
One of your responsibilities as a trustee is to make sure that fund assets are kept separate from your personal assets.

Not only is this a requirement under super laws but it also protects the fund’s assets from personal financial disputes.
Removes the risk that the assets will be used for personal use, and helps your auditor identify asset ownership.
To help meet the separation of asset rules your fund should have a separate bank account for the fund’s money.

It must also be clear that your fund is the owner of its assets. Assets must be documented as held by trustees on behalf of the SMSF.
The assets of the fund cannot be held in the name of a trustee alone.

Meet Judy…
Judy purchased shares using money from her fund, but accidentally put them in her own name, instead of the SMSF’s name.

Judy always intended to get this fixed, but as time passed by - it slipped her mind. Judy lost her job recently and fell behind in her mortgage repayments, so the bank took Judy to court.
Because the shares are in Judy’s name, she was forced to sell them to pay off the debt. This means her fund has now lost a valuable asset!
Judy’s auditor reports to the ATO that the fund has breached super laws. Judy’s fund could be made non-complying, meaning it could lose almost half its assets! Judy may also be disqualified from being a trustee and will have to pay thousands of dollars in fines.

Her retirement plans are not looking so good!
The title on some assets such as property is subject to different State laws.

You should speak to an SMSF professional if you need help with fund asset ownership and title documents.

Remember, your SMSF assets are kept separate from your own assets because they are not for your personal or business use - they are solely for your retirement.

Restrictions on investments

All SMSF transactions must be on an arm's length basis.

This means that fund assets must be bought and sold at market value and income on the assets should show a true market rate of return.

This is important if you are dealing with someone who is not at arm’s length to your fund – that is, they are related in some way to the fund.

Here are some examples of trustees breaching the arm’s length rules.

Judy's SMSF loaned money to her friend. The loan was repaid five years later, without interest.

Normally, a commercial rate of interest would have been paid.
Kelly’s business leases its property from her SMSF for half the market rate of rent.


Kelly’s fund is not getting a true market rate of return.

Bob’s SMSF invested in a related unit trust that has never paid distributions to his fund, even though they were due.
Bob was happy for the unit trust to grow instead, but under normal commercial circumstances, Bob’s fund would have demanded payment.

Tony’s SMSF is selling a house. An unrelated buyer offers market value for the property. However, the fund sells to Tony’s son for less than this.
By accepting less than market value, the fund has breached the rules.
Conducting transactions at arm’s length helps you to protect your retirement benefits – it is designed to make sure that you get appropriate returns on the fund's investments.

If your investments are not at arm’s length, the value of your SMSF assets will suffer, and there could be serious consequenses for your fund – and to you personally.
Speak to an SMSF professional if you have any questions about arm’s length rules and investments.

Carrying on a business in an SMSF

Self-managed super funds (SMSFs) are not prohibited from carrying on a business, but the business must be:

> allowed under the trust deed
> operated for the sole purpose of providing retirement benefits for fund members.
The rules governing SMSFs prohibit or limit some activities available to other businesses, such as entering into credit arrangements or having overdrafts. You should get professional advice before carrying on a business through your SMSF.

Tax on income

The income of your SMSF is generally taxed at a concessional rate of 15%. To be entitled to this rate, your fund has to be a ‘complying fund’ that follows the laws and rules for SMSFs. For a non-complying fund the rate is the highest marginal tax rate.
The most common types of assessable income for complying SMSFs are assessable contributions, net capital gains, interest, dividends and rent.