SMSF investments guide: what your fund can (and can't) hold

How SMSF investing actually works

Every investment inside an SMSF is filtered through one question first: does it satisfy the sole purpose test? Section 62 of the SIS Act says the fund must be maintained solely to provide retirement benefits (or death benefits) to members. A holiday house the members occasionally stay in fails. A residential property rented to a member's adult child fails. A commercial premises leased to a member's business at documented market rent passes. This test — not clever tax planning — is the compliance line every SMSF investment decision has to sit inside.

The next filter is the in-house asset rule. In broad terms, the fund cannot invest more than 5% of its total market value in assets connected to a related party — loans to related parties, investments in related trusts or companies, or property leased to related parties (with business real property as the main carve-out). Breaches are measured at 30 June. If the ratio is above 5% at year-end, the trustees must lodge a written plan with the auditor showing how they'll get back below 5% by the end of the next financial year.

Direct property is by far the most-searched SMSF investment. It can be bought outright with fund cash, or financed with a Limited Recourse Borrowing Arrangement (LRBA) — a specific structure where the property is held in a bare trust and the lender's recourse is limited to that single asset. LRBA loans have their own rules: single acquirable asset, no improvements funded from borrowings, and safe-harbour terms (PCG 2016/5) if the loan comes from a related party. easySMSF's Premium tier covers funds holding LRBA property because the bookkeeping — separate bare-trust accounts, loan reconciliations, principal-vs-interest split — is materially more work.

Shares and ETFs are the operationally simplest asset class. Any Australian retail broker or IBKR-style international broker will open an SMSF account, and modern administrators pull the trade data automatically. Valuation at 30 June uses the closing market price. Crypto is now well-trodden — Australian exchanges like CoinSpot, Independent Reserve and Swyftx all support SMSF accounts, and the audit expectation is a wallet address the auditor can verify at balance date. Collectibles (art, wine, jewellery, cars) are legal but heavily restricted under SIS Regulation 13.18AA: they must be insured in the fund's name within seven days of acquisition, cannot be stored in a member's private residence, and cannot be leased to a related party.

Underpinning every investment decision is the written investment strategy. This is not a formality — it's a SIS Regulation 4.09 requirement, and it's the first document the auditor asks to see. It must cover risk, return, diversification, liquidity, the fund's ability to pay benefits as they fall due, and whether the trustees have considered holding insurance for each member. easySMSF gives every new fund a template that satisfies the regulation on day one, and prompts trustees to review and re-sign it at least annually.

• Every asset filtered through the sole purpose test (SIS s.62)
• 5% in-house asset limit measured at 30 June each year
• Direct property with or without an LRBA — commercial can be leased to related businesses at market rent
• Crypto and collectibles allowed with specific storage and valuation rules
• Written investment strategy required — template included with every easySMSF setup