Register For Our Mailing List

Register to receive our free weekly newsletter including editorials.

Home / 143

ATO perspective: ‘only’ 2,184 SMSFs have assets over $10 million

Both Chris Jordan, Commissioner of Taxation at the Australian Tax Office (ATO), and Greg Tanzer, Commissioner at the Australian Securities & Investments Commission (ASIC), gave an update on compliance and regulatory issues at the SMSF Association National Conference in Adelaide this week.

Jordan’s dominant message was that the tax system will be too complicated if it tries to control a few outliers. He told the conference, “Don’t design the system for the last worst person. You should make it easier for the majority.”

For SMSFs, he put the complaints about high value SMSFs into perspective. In 2015, 2,184 SMSFs had balances over $10 million, but they include up to four members in each fund. Only six funds had balances over $100 million. The ATO has looked closely at each and they are “accidents of history”, often with balances accumulated over 30 years with one or two investments that had done extremely well. There are an additional 994 APRA fund members with over $10 million.

But there are over half a million SMSFs. Do you design a system of regulation for the 99.5% with less than $10 million, or make it complex by focussing on the extremes? With the current contribution limits of $30,000 (or $35,000) concessional or $540,000 non-concessional (using the bring-forward rule), it is difficult to build very large balances now.

Notwithstanding, the ATO does look at out-of-pattern numbers, such as a large increase in income or assets in a particular year. These funds may be studied more closely. The ATO had a particular problem with one fund where the shares were revalued from zero to a large number as soon as the member reached the exempt income age. He said, “Was the investor suddenly striking gold? What were the real numbers?” They also had issues where a company with large franking credits was moved into superannuation giving the member a massive refund of franking credits.

In addressing this balance between over-regulation and compliance, Commissioner Jordan explained the priority of the ATO is to improve confidence and trust in the tax system and “contributing to economic and social wellbeing by fostering willing participation in tax system.”

People are more likely to comply:

  • the easier it is to understand the tax rules, and
  • the more confidence they have in the integrity in the tax system.

Taxpayers are confused by complexity. “If A to C is enough, why do we require everything from A to Z?” The aim is to make guidance specific, adopt better early engagement and try not to take people to court and write lengthy letters.

For SMSFs, his particular focus is on related entity rules, and that the assets of the super fund are not for the trustees to use in any way they wish. For example, some people with gambling habits had written cheques from their funds to cover their habits. The ATO also wants Limited Recourse Borrowing Arrangements done properly, and anyone with a problem should contact the ATO rather than waiting to be caught. He wants an “open architecture in communications”.

He is also concerned that some SMSF auditors advertise a $200 cost for an automated online audit. Is it adding any real value? What do they really do for so little, where are they, and what’s it worth? The vast majority of taxpayers and industry professionals want to do the right thing, and the ATO wants to balance the cost of compliance versus oversight. Industry must help sort it out.

Greg Tanzer, ASIC Commissioner, explained how the regulators work closely together, with much better cooperation and communication recently. There are 6,700 registered SMSF auditors, but to be eligible, they need to pass a range of tests including at least 300 hours’ experience of auditing under supervision. This is not basic accounting but verifiable SMSF work. ASIC cancelled about 400 registrations last year for auditors failing to complete the required examinations. SMSF auditor problems include a lack of arms’ length on some transactions and poor quality documentation.

Tanzer emphasised the changes coming to accountants working with SMSFs. Until 30 June 2016, accountants can provide advice on establishing and operating an SMSF under an exemption from licensing requirements. This exemption has now been removed (and accountants always needed an AFSL to provide investment advice). There is an opportunity to apply for a limited licence by 30 June 2016 which includes the relaxation of some education requirements. However, accountants who want to continue to work with SMSFs must apply for a licence by 1 March 2016. It’s a serious application process and it will take a while for ASIC to review. He warned, “If you don’t have a licence after 30 June, you will be acting illegally.”

Accountants can be authorised under another AFSL, or apply for a limited or full licence, or change the business model to only do some bookkeeping. But accountants will no longer be able to advise on establishing or operating SMSFs unless licenced.

In summary, Tanzer added, “SMSFs are a marvellous competitive foil for retail and industry funds.” ASIC strongly supports the choice offered by SMSFs, but trustees need to realise that having their own fund is a weighty responsibility.

 

Graham Hand attended the SMSF Association National Conference courtesy of the Association. These comments are general interpretations and do not address any personal circumstances.

 

  •   19 February 2016
  •      
  •   

 

Leave a Comment:

RELATED ARTICLES

What are wealth industry regulators thinking about?

Are you paying tax by not starting a super pension?

SMSFs: 8 reasons they are over-spruiked and over-rated

banner

Most viewed in recent weeks

Why spending more in early retirement can improve lifetime income

Conventional wisdom encourages retirees to preserve superannuation. But if those likely to qualify for the Age Pension later in life spend a little more today, it may deliver higher lifetime income and a more stable retirement.

It’s time for LICs to die

A high-profile dividend cut and a prominent fund manager’s apology have reignited a long-running debate. If investors can access similar exposures more cheaply and efficiently elsewhere, what exactly is keeping LICs alive?

Is it time to bail on Australian stocks?

For generations, Australian investors have backed banks, miners and dividends. But has that loyalty come at a cost? A look at the numbers raises an uncomfortable question about where future returns will come from.

Testamentary trusts survived the trust tax. The drafting battle has just begun.

The fight over testamentary trusts looked settled. Then the draft legislation arrived. Hidden in a technical detail is a question that could force many families to rethink wills they thought were already future-proof.

Meg on SMSFs: What do we think about reversionary pensions these days?

Reversionary pensions have long been a staple of SMSF estate planning, but are they still the best option? Meg Heffron revisits a once-clear favourite and asks whether changing super rules have shifted the balance.

The new capital gains tax trap for your portfolio

Investors have long accepted one portfolio rule without much question. A major tax shift could change that calculation entirely, forcing difficult trade-offs between risk, discipline and an overlooked cost lurking beneath.

Latest Updates

Exchange traded products

It’s time for LICs to die

A high-profile dividend cut and a prominent fund manager’s apology have reignited a long-running debate. If investors can access similar exposures more cheaply and efficiently elsewhere, what exactly is keeping LICs alive?

Taxation

Will investors be better or worse off under new housing tax changes?

Housing tax reforms have sparked warnings of market turmoil and promises of greater fairness. But after modelling nearly two decades of property data, the results suggest winners and losers may not be who many investors expect.

Retirement

Three considerations before reshaping your legacy plan

Many retirees hope to leave a legacy. Proposed trust tax reforms could force families to rethink. The question is not how much to leave behind, but whether today's inheritance plans will still make sense as circumstances change.

Investment strategies

Why experienced investors still get markets wrong

Retirement is approaching. Markets are noisy. And every headline seems to demand action. The biggest investment risk isn't fear, greed or market volatility, it often arrives disguised as research and sensible risk management.

Shares

Why pay more for less?

Conditions were stacked in favour of professional investors in 2026. Most still fell short, raising questions about where investors should look for value. Meanwhile, an alternative strategy continued to make its case.

Investment strategies

Bleeding air out of the bubble

Equity valuations have fallen sharply over the past year, yet investors have largely been spared the volatility and losses that typically accompany a de-rating. What explains this unusually orderly reset? Here are five key drivers.

Strategy

Has AI gone rogue?

We worry about AI becoming conscious. But what if consciousness isn't the issue? The more unsettling possibility is a machine capable of pursuing objectives relentlessly, without motives, emotions, or awareness of any kind.

Sponsors

Alliances

  • ASA-Logo-RGB-ActiveGreen-web.png

© 2026 Morningstar, Inc. All rights reserved.

Disclaimer
The data, research and opinions provided here are for information purposes; are not an offer to buy or sell a security; and are not warranted to be correct, complete or accurate. Morningstar, its affiliates, and third-party content providers are not responsible for any investment decisions, damages or losses resulting from, or related to, the data and analyses or their use. To the extent any content is general advice, it has been prepared for clients of Morningstar Australasia Pty Ltd (ABN: 95 090 665 544, AFSL: 240892), without reference to your financial objectives, situation or needs. For more information refer to our Financial Services Guide. You should consider the advice in light of these matters and if applicable, the relevant Product Disclosure Statement before making any decision to invest. Past performance does not necessarily indicate a financial product’s future performance. To obtain advice tailored to your situation, contact a professional financial adviser. Articles are current as at date of publication.
This website contains information and opinions provided by third parties. Inclusion of this information does not necessarily represent Morningstar’s positions, strategies or opinions and should not be considered an endorsement by Morningstar.