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The ATO considers that an SMSF investment strategy must be reviewed regularly at least annually and in the case of significant events. Major market correction and volatilities are a significant event in this regard. In relation to the coronavirus situation, the ATO accepts that short-term variations to the investment approach including asset allocations does not constitute a variation from the investment strategy but action must be taken to adjust the investments.
“Where the assets of an SMSF or the level of investment in those assets fall outside of the scope of your investment strategy, you would take action to address the situation, which could involve adjustments to investments or updating your investment strategy. We don’t consider that short term variations to your articulated investment approach, including to specified asset allocations whilst you adjust your investments, constitute a variation from your investment strategy.”
It has to be borne in mind that in relation to SIS compliance, the SMSF is not assessed on the merits or performance of the investments in the investment strategy, but whether the strategy has been formulated, reviewed regularly and implemented in accordance with sub-regulation 4.09(2) of the SIS Regulations. This is an operating standard.
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