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Hi Paul,
I have an SMSF Investment Strategy similar to the one that was in the Switzer Super Report some months ago – where it involves the Portfolio Range Benchmark.
For the purposes of taxation: if the Strategy is within the range e.g. 0-50% (Shares), but out on the Benchmark, due to the sale of shares which I hope to buy back in a couple of months, does that still comply, or do I have to make another Investment Strategy?
A: Thanks for the question.
The asset allocation “ranges” and “benchmarks” are usually taken as a firm guide of the Trustees’ intentions. Because the Investment Strategy can be amended by the Trustees at any time upon calling a meeting, they are not “cast in stone” limits.
If your fund was to sit outside the target range of an asset class for some time, you would expect:
a) either the Trustees would formally amend the investment strategy; or
b) formally record (in a note attached to the investment strategy) their reasons for doing so.
If you are within the asset range but away from the benchmark, it would really depend on the materiality of the difference. There is no downside in formally recording the decisions/actions of the Trustees, so acting conservatively, if it was material and temporary (eg. due to a sale of a security that was about to be replaced) then I probably wouldn’t bother – if it was material and more than just temporary, then I would record the decision/action and get the Trustees to formally note it.
