The SMSF Professionals’ Association of Australia (SPAA) welcomes the decision by ASIC to clarify the working of the wholesale investor test and how it relates to SMSF professionals and trustees.

SPAA CEO and Managing Director, Andrea Slattery, says the organisation has been advocating “long and hard” about the need to give SMSF professionals and trustees more certainty around the wholesale investor test and this ASIC statement largely achieves this end.

“The previous ASIC position, expressed in QFS 150, had created uncertainty as to when the wholesale client test applied to an SMSF trustee receiving advice on a financial product – a point ASIC acknowledged in its statement when it said ‘this had been an area of ongoing legal uncertainty’.

“SPAA strongly believed that the requirement that an SMSF had to hold $10 million of net assets was an incorrect interpretation when the advice was relevant to an investment being made by an SMSF trustee.”

ASIC’s clarification, issued on 8 August, allows SMSF trustees to be treated as wholesale clients where they have net assets of at least $2.5 million, or income of $250,000 a year for the past two financial years, or where the relevant investment is worth a minimum $500,000.

Slattery says SPAA believes that these tests are more appropriate for SMSF trustees seeking to be treated as wholesale clients.

Although SPAA fully endorses the ASIC clarification, the organisation believes there is still uncertainty about how the $2.5 million asset test applies to SMSF trustees.

“ASIC’s statement says that the threshold applies ‘if the trustee has net assets of at least $2.5 million’. We need clarification from ASIC whether this means only assets in the SMSF, the member’s balance in the SMSF, and also includes the trustees’ personal assets outside superannuation.

“The interpretation of this issue is fundamental to how the wholesale investor test functions, not only to trustees but to the accountants that issue certificates stating that an investor meets the wholesale investor test thresholds,” Slattery says.

About SPAA

The SMSF Professionals’ Association of Australia (SPAA) is the authoritative voice for the self-managed superannuation fund (SMSF) sector. SPAA, which represents professionals providing a range of services across various disciplines in the complex area of SMSFs, is an advocate for the highest professional standards and competence to ensure SMSF trustees always receive the best possible advice.

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