The strategy: To work out how the new rules for self-managed super funds affect me.
What new rules? Regulations came into effect last week (August 7) adopting some of the changes to self-managed funds (SMSFs) recommended in the Cooper review. These regulations are aimed at improving the governance of SMSFs, particularly how they manage and monitor their investments.
So what do I have to do? The head of technical services at SuperIQ, Kate Anderson, says there are four key changes. First, trustees will have to consider whether the fund should hold insurance for one or all of its members.
That isn't too onerous, as many people are already insured through their super fund (it is more tax-effective than buying the insurance yourself) and the regulations require it to be considered only - they don't make buying insurance compulsory. Anderson says funds will need to document their policy on insurance as part of their investment strategy and review it regularly.
The regulations also require funds to review their investment strategy regularly and to value their assets at market rates for reporting purposes.
The reviews will need to take account of any changes in the circumstances of the fund and its members. Anderson says the regulations don't state what ''regularly'' means and will depend on how the fund manages its investments.
If the fund is an active investor, reviews will need to be done more often than those of a fund mostly holding its investments.
Is once a year enough? Under the previous rules, Anderson says, most funds were required to review their strategy at least once a year. She says they will now need to undertake more regular reviews - quarterly, twice a year or on an ''as needed'' basis. These reviews won't necessarily mean changes in the investment strategy. They are more about ensuring trustees stay on top of the investment environment and adjust their strategy when changes are needed.
Will I have to value the investments that regularly as well? Obviously, you'll need an up-to-date idea of the fund's assets when reviewing its investment strategy. But the new rules on market value are for reporting purposes and are aimed at ensuring members have a clear picture of their current entitlements and their fund's financial position.
Until now, SMSFs have been able to report the value of their assets at either market or historical values.
But Anderson says they must start using market values for the statements for their 2012-13 income year.
She says funds paying a pension, and funds with in-house assets, are already required to value their assets at market value each year. This change will simply bring all funds under the same requirements. On the plus side, the government has dropped the original recommendation that assets be valued at net market value (that is, after expenses) as applies to other super funds.
Are there any more changes? The other regulation deals with ownership of the fund's assets. It basically says that ownership of the assets must be kept separate to that of the trustee personally, the fund's employer sponsor, or some other associate. To some extent this is already a requirement but Anderson says the new regulation will give the Tax Office power to enforce it. She says mixing the fund's assets with those of associated parties is one of the most common super rule contraventions reported to the Tax Office.