Investment strategies and purchasing investments

Everything an SMSF trustee should know about compliance.

It is important for SMSF trustees to be reminded of the rules that apply to the purchase of investments. The main requirement is that the investments must fit within the investment strategy for the super fund.

 As long as an investment being purchased is allowed by the investment strategy, and the payments comply with the other investing rules such as,

  • the investments must be purchased and maintained at arms length,
  • the investments cannot be purchased from related parties except in limited cases, and
  • in-house assets cannot exceed 5 per cent of market value of the fund,
  • no resolutions need to be passed or correspondence prepared.

All of the normal documentation when purchasing investments will however need to be completed. Trustees when completing this documentation should make sure that the investment is being purchased in their capacity as a trustee for the super fund. Where this is not done, and the trustees are individuals, there can be confusion as to whether it is a super fund investment or a personal investment. It is also a requirement that the super fund is always shown as being the owner.

There are some assets that can only be registered in the name of the trustees without the super fund's name being mentioned, such as property. In this situation back up documentation should show the investment is being purchased by the super fund. In addition it would be good practice for the trustees to pass a resolution that states this.


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