Let’s start with a story, set in Norway in 1969 when they first discovered oil. A decision was made that would set the country apart from other petro-states, and to put the revenue generated into an oil fund for the people. Its wealth fund is now more than three times the size of Saudi Arabia’s. (In fact it’s the biggest in the world).
For the first time ever, Norway will draw more money from the fund than the vehicle generates in cash flow, due to the twin crises of COVID-19 and a slump in oil prices. That requires an unprecedented asset sale to cover state spending. However, this also means Norway won’t need to borrow any extra money from bond markets. Norway’s government estimates it will need to take $US37 billion from the fund this year.
This got me thinking. Self-managed Super Fund (SMSF) investment is really based on the principle of DIY funding and offers the flexibility to invest in out of the ordinary assets providing the investment meets general rules set by the ATO such as:
- No personal use
- Stands on its own two feet
- Meets the sole purpose test
- Generates retirement income for the beneficiaries
- Can demonstrate capital appreciation
SMSF’s are able to invest in a variety of things, including:
- Australian and international shares (listed and unlisted)
- Residential or commercial property
- Cash and term deposits
- Fixed income products
- Physical commodities
The ATO recently provided a list of the most unusual investments made by some funds, and if you have ever wondered about Moon Rock, that was at the top of the list. Some of the others were:
- Some of the individually crafted bollards along the Geelong waterfront;
- A Jimmy Hendricks guitar;
- Portable toilets; and
- A pride of lions (leased to a circus)
Surprisingly the above five investments all satisfied the sole purpose test.
If you want to get a little creative with your super fund investments, or need to get more information about which super fund strategy is right for you speak to your CAAA Commercial Concierge today.
Financial Product Advice - Disclaimer To the extent applicable the above general information we have provided you is purely factual in nature and does not take account of your personal objectives, situation or needs. The information is objectively ascertainable and, therefore, does not constitute financial product advice. Similarly, any tax, superannuation or self-managed superannuation fund advice we have provided is factual and not financial product advice as defined by the Corporations Act. It should be noted that taxation is only one of the matters that you need to consider when making a decision on a financial product. If you require personal or financial product advice you should consult an appropriately licensed or authorised financial advisor. Commercial Associates Accountants and Advisors Pty Ltd A.C.N 117 062 183 and its subsidiaries are not licensed to provide financial product advice.