The ATO reveals the truth about SMSFs

The ATO's latest comments on self-managed super funds will antagonise the anti-SMSF brigade even further.

Self-managed superannuation funds have been attacked from all sides in recent times, coming under fire for supposedly being used as tax avoidance schemes for the rich and powerful. But now, the Australian Taxation Office has taken the unprecedented step of coming out in support of the nation’s fastest growing super group.  

This dramatic event now makes it certain that the self-managed fund movement will become by far the dominant force in Australian superannuation. The anti-SMSF aggressors must now back off and halt their misguided attacks (Why the misguided attacks on SMSFs must stop, September 5).

In his keynote address at the Chartered Accountants Australia and New Zealand National SMSF Conference, the Australian Tax Office’s deputy assistant commissioner of superannuation, Stuart Forsyth, said that Australia’s 534,000 SMSFs and their one million members contribute significantly to the overall success of the superannuation sector and should be “celebrated”.

Forsyth declared that overall the compliance of self-managed funds was high and was improving.

And he went further: “Self-managed super funds are here to stay. We can see one million SMSFs, down the track”.

Unlike the large super funds, which are regulated by the Australian Prudential Regulation Authority, SMSFs are regulated by the tax office, which ensures they comply with both tax and superannuation regulations. In coming out in support of SMSFs and their overall compliance with the rules, the ATO has thrown a spanner in the works for the anti-SMSF brigade, who like nothing more than to sprout its criticism of the fast-growing sector. The organisers of the vicious press campaign against SMSFs remain a secret but it is believed Treasury plus the retail and industry funds engineered it.

The anti-SMSF campaign often portray SMSFs as a tax avoidance strategy for the wealthy, but the simple fact is that the tax rules for self-managed funds are the same as for all super funds.

I hasten to add that while most SMSFs are compliant, there will naturally always be a few bad apples. That’s no different to anywhere else.

But if Forsyth is right about SMSFs, then the movement is set double. When the sums were last calculated, self-managed super funds had one third of the $1.5 trillion superannuation pie (total $495bn). They were well ahead of retail and industry funds, and growing fast.  Forsyth revealed that self-managed funds now control $557bn worth of assets, a rise of $62bn, or 12.5 per cent in a year (Aussies stash $557bn in SMSFs, September 11).

The self-managed super fund market share will continue to increase because they have well over half the superannuation pool being used to pay retirement pensions.

There have also been inaccurate suggestions that self-managed funds are moving rapidly into residential property. While there is no doubt self-managed funds are a force in the residential market, the investment represents a tiny part of the $557bn in SMSFs overall. Some $8.7bn is held by SMSFs under Limited Recourse Borrowing Arrangements. The LRBA growth rate is much less than the overall SMSF growth, again showing that the anti-SMSF brigade has its facts wrong.

The campaign against SMSFs is a devious attempt by bigger players to try to get money flowing back into the big retail and industry funds. It won’t work. SMSFs are the future of superannuation and growth in the self-managed sector will continue at a rapid pace.  

Related Articles