In-house assets

1 April 2020

The downturn in the share market may result in the SMSF not meeting the 5% in-house asset limit at the end of the financial year.  In this situation, the ATO will not undertake compliance activity if a rectification plan is in place by 30 June 2021, as follows:

“If, at the end of a financial year, the level of in-house assets of a SMSF exceeds 5% of a fund’s total assets, the trustees must prepare a written plan to reduce the market ratio of in-house assets to 5% or below.  This plan must be prepared before the end of the next following year of income.  If an SMSF exceeds the 5% threshold as at 30 June 2020, a plan must be prepared and implemented on or before 30 June 2021.  However, we will not undertake compliance activity if the rectification plan is unable to be executed because the market has not recovered or it is unnecessary to implement the plan as the market has recovered.”

“If, at the end of a financial year, the level of in-house assets of a SMSF exceeds 5% of a fund’s total assets, the trustees must prepare a written plan to reduce the market ratio of in-house assets to 5% or below.  This plan must be prepared before the end of the next following year of income.  If an SMSF exceeds the 5% threshold as at 30 June 2020, a plan must be prepared and implemented on or before 30 June 2021.  However, we will not undertake compliance activity if the rectification plan is unable to be executed because the market has not recovered or it is unnecessary to implement the plan as the market has recovered.”

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