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Your Self-Managed Super Fund (SMSF) invests your super to provide for your retirement. Each year, your accountant and auditor want to see your Investment Strategy. What did you plan to invest in? What risks did you consider? How does your fund pay pensions, insurance premiums, tax and other expenses?
More than 4,600 financial advisers, lawyers and accountants use our services. Advisers in that network report that the Investment Strategy is the first document the ATO examines in their SMSF desktop audits.
Your Investment Strategy is your written plan for investing your SMSF’s money. It records what you aim to achieve, the investments you choose and the risks you accept. It also addresses how your fund meets its payments and whether it should hold insurance for its members.
Your SMSF Deed sets the fund’s rules. Your Investment Strategy records your approach to investing within those rules. Review your Strategy each year. Record what you considered and any changes you make.
Build your Investment Strategy with Legal Consolidated. You also receive our Investment Statement Library: 15 separate statements to use with your Strategy. Each year, select the statements relevant to your SMSF for that year. Keep them with your Strategy and supporting records.
Your accountant or auditor asks why most of your SMSF sits in one property. Or how your fund pays a pension when its money sits in investments that take time to sell. A list of investments does not answer those questions.
Your Library gives you 15 separate statements to record the reasons for your approach. Select the statements relevant to your SMSF for that year. Keep them with your Investment Strategy and supporting records.
Each statement has its own explanation page. It tells you when to use the statement, what your auditor looks for and which records support it. Keep the explanation page in your Library. Attach the selected statement to your Strategy for the relevant financial year.
Most of your SMSF’s money sits in the property. The rent stops, but loan repayments, insurance and other expenses continue. If your SMSF pays a pension, those payments also need funding.
Your auditor asks how you considered those risks. Use the Real Estate, Borrowing and Concentrated Investments statements to record your approach. Keep the relevant lease, loan records, accounts and other supporting documents with your Strategy.
The ATO accepts that an SMSF might invest all its retirement savings in one asset or asset class. It asks trustees to document the concentration risks and explain how the investment meets the fund’s objectives and cash requirements. Read the ATO guidance.
The Legal Consolidated Investment Statement Library covers what the ATO wants to see:
Select the statements relevant to your SMSF for that year. Use those that reflect your investments and the matters the trustee actually considered.
Different investments raise different questions. For crypto, who controls the wallet? What happens if an exchange freezes withdrawals? For artwork, where do you store it and who insures it? For a private loan, what security does your SMSF hold and how does it recover the money?
The Library addresses these practical questions. It gives you statements to use alongside your Strategy, accounts and investment records. Read about SMSF investments in cryptocurrency.
Including an investment in your Strategy does not remove the rules governing that investment. Your SMSF must still follow its Deed and superannuation law.
Under reg 4.09 of the Superannuation Industry (Supervision) Regulations 1994 (Cth), the trustee must formulate, regularly review and give effect to an investment strategy that considers the fund’s circumstances. See also s 52B(2)(f) of the Superannuation Industry (Supervision) Act 1993 (Cth).
Those considerations include:
Legal Consolidated’s pro-forma Strategy addresses these matters. Your selected Library statements record the trustee’s consideration of the investments and risks relevant to your SMSF.
Your auditor checks whether your Strategy addresses the required matters, whether your fund followed it and whether you reviewed it. The auditor also needs evidence supporting the fund’s accounts and compliance.
Your statement explains the trustee’s reasons. Your accounts, contracts, ownership records and valuations support the facts. Keep them together so your accountant and auditor follow the story.
The auditor’s work does not approve your investment choices or promise that an investment succeeds. The Auditing and Assurance Standards Board’s guidance, paragraphs 327–331, explains the investment strategy checks.
In Cam & Bear Pty Ltd v McGoldrick [2018] NSWCA 110, the fund’s accounts described money held through an investment business as cash. The dispute exposed the importance of checking whether that money was recoverable and communicating the problem to the trustee.
The practical question is simple: what does your SMSF actually own, and when does it receive its money?
That question matters for private loans, unlisted investments and money held through investment platforms. Use the relevant Library statement to record your consideration. Keep the underlying evidence with it.
Review your Strategy at least annually and when your fund’s circumstances change. A member starts a pension. A member joins or leaves. Your fund borrows to buy property. An investment becomes difficult to sell.
Record the review and any decisions. Update the Strategy and relevant statements where necessary. Give your auditor evidence of the review.
The law requires regular review. The ATO expects review at least annually. A review does not automatically require replacing an unchanged Strategy. Read the ATO guidance on reviewing your Strategy.
Your Legal Consolidated SMSF Deed and SMSF Update already include an Investment Strategy.
This standalone product serves an existing SMSF that needs its Investment Strategy documents without building a new fund or purchasing a Deed update. Check what you already receive before ordering separately.
Build your SMSF Investment Strategy with guidance at each step.
Read the free hints as you answer the questions. Save your work and return when you are ready.
Receive your Investment Strategy, adoption minutes and our law firm’s cover letter. You also receive the 15-statement Investment Statement Library, with an explanation page before each statement.
Select the statements relevant to your SMSF for that year. Record your reasons. Keep them with your Strategy and supporting records.
Read our articles and explore the steps for your SMSF:
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