By way of background, superannuation is the Australian version of a pension or retirement scheme. People can either choose to pay into a superannuation fund (super fund) that is administered by someone else, or they can create and administer their very own super fund. This is called a "self-managed super fund" or SMSF.
The regulation for all superannuation funds is very strict. The regulation is set out by the country's legislation, as well as rules and regulations set up by the Taxation Office (ATO).
When creating an investment strategy for SMSFs, it is therefore vital to be aware of all the rules and regulations that currently govern SMSFs. In addition, it is essential to keep up to date with changes in legislation, as well as monitoring, as investments could not comply with new standards once the rules have changed.
For example, one rule that affects the planning of an SMSF investment strategy is whether an asset in that has been acquired for the super fund gives rise to "current day benefits' or is solely acquired for retirement purposes. For example, an SMSF may invest in assets, such as art, jewellery or wine. However these investments should solely be an investment to benefit the trustee for retirement purposes.
A recent change in regulation with regard to these items, also called "collectables and personal use assets", means all SMSFs now need to comply with the stricter rules with investments in these assets made after 1 July 2011. According to the ATO website, items purchased prior to 1 July 2011 will need to comply with the updated standards by 1 July 2016 or the assets need to be disposed of.
All self managed super funds need to be independently audited on a yearly basis to ensure they comply with the laws and regulations. This task is completed by a superannuation auditor or an independent SMSF auditor; the ATO has published a list of recommended and preferred auditors.
Because it can be difficult to keep up to date with regulative changes, let alone making the changes to the investment strategy for the SMSF to remain compliant, many people choose to work with a superannuation accountant and an independent SMSF auditor to know their retirement savings are safe and compliant. Know more about SMSF Set up