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Information You won’t get from Unlicensed Accountants #11

Along with this raft of legislative change, the Australian Securities and Investments Commission (ASIC) has also introduced new licensing requirements for accountants who work with and advise Self Managed Superannuation Fund (SMSF) Trustees. Only approx. 10% of accountants have complied with these changes to date.

As such if you, as many, consider your accountant would be your 1st port of call for Financial Advice, they will likely advise you, they are unable to provide the information you require & should consult a qualified Financial Adviser / Planner.

This is general advice only and you should seek expert financial advice from a qualified financial adviser before acting on any of the information covered in these topics.

ATO Cracks down on ‘Execution Only’ / Single Asset Class SMSF

The ATO is in the process sending approx. 18,000 letters to SMSF trustees to help them understand the importance of having a robust investment strategy for their SMSF. The SMSFs that have been targeted are those that have over 90% of their SMSF invested in a single asset, usually real property.

SMSF asset allocation has been questioned for a number of years now, with high allocations to low yielding cash and typically a small basket of Australian shares (comprised of the usual suspects such as the banks).

It would seem the ATO’s interest this time has been sparked by a concern that unsuspecting trustees are being targeted by the dangerous cocktail of ‘property spruiker’ and ‘unlicensed accountant’.

The recent collapse of the ‘Ralan’ property group is a perfect example of why the ATO needs to be vigilant around ensuring SMSF trustees have closely considered their investment strategies. The collapse of this group has resulted in approx. 2,300 investors see almost $300 million of their off the planet deposits disappear.

The SMSF investment strategy should closely align to members long term goals and objectives. ‘The Council of Financial Regulators’ released a report earlier in the year expressing concern over the fact that the assets class of choice, especially for low balance SMSFs using an LRBA, was a single residential property.

The ATO is also writing to a large number of auditors responsible for these SMSF audits.

There will definitely be far closer attention paid to the audits of these funds than may have been in the past, especially given recent court decisions that have ruled against auditors in favour of trustees.

As the DALBAR Report noted ”Investors so often cost themselves money, because the behaviours elicited by short term focus, are almost always irrational.”

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