Retirement
Your SMSF bill could be slashed, but the odds of a penalty are higher
Retirement
Your SMSF bill could be slashed, but the odds of a penalty are higher
The government wants to change the way self-managed funds are monitored, and it could slash your yearly fees, but the risk of facing a penalty could be much higher.
Your SMSF bill could be slashed, but the odds of a penalty are higher
The government wants to change the way self-managed funds are monitored, and it could slash your yearly fees, but the risk of facing a penalty could be much higher.
One of the promises of the Turnbull-turned-Morrison government is that it will cut red tape for Australian taxpayers. It was an election promise in 2015, and unsurprisingly, is surfacing again as a catch-cry ahead of the 2019 federal election.
SMSF investors are now being promised the cost of maintaining their funds will be cut, as a proposal to move from a compulsory annual audit to a minimum of once every three years is being evaluated.
The optics look good. The ATO has long said the SMSF sector is overwhelmingly compliant, so excessive policing doesn’t appear necessary. The portfolio composition of many SMSFs is also relatively simple - shares, cash and property - and the associated transactions are vanilla. Moving to a three-year audit cycle for a stack of funds which turn up with a clean bill of health each year seems reasonable then, on the surface.
Peel back the layers of the proposal even slightly, and it looks like one big administrative nightmare.
For one, there’s a good chance moving to a three-year cycle could be more expensive for SMSF investors than the current annual requirement.
Minor compliance red flags are often picked up during the annual audit process, which can compound over time into something worthy of a breach notice. Big four accounting firm KPMG, together with the support of respected, long-standing SMSF auditors, said a significant contributor to the efficiency and cost-effectiveness of running an SMSF is its compulsory annual clean up.
“Where significant audit issues arise and require consultation with trustees, the potential time lag could, in our view, make those consultations more difficult and increase the cost of reaching an appropriate resolution or conclusion,” KPMG said in its submission to government.
“This may occur where their record-keeping is deficient during that period, or where a significant audit matter is raised two years later than would otherwise have been the case,” KPMG said.
The eligibility process is also messy, and hinges on SMSF investors being completely across the deeply complex regulatory and legislative environment their fund exists in.
For example, there are a range of transactions which will still trigger a compulsory annual audit. These include commencing a superannuation income stream, the death of a member, the addition or removal of a member, starting or maintaining a limited recourse borrowing arrangement, and acquiring a loan from a related party.
Further, Treasury’s consultation paper also proposes eligibility for a three-yearly audit will be based on self-assessment by SMSF trustees. If those trustees get it wrong, they could face “further action” from the ATO, Treasury said.
So, we have before us a measure that increases risks of non-compliance, won’t apply to the entire SMSF population, and is complex to administer. Granted, the government is currently sifting through responses from its consultation period, and may produce an alternative that holds water. In the meantime, investors should be on the lookout for promises and policies which might seem conducive to wealth building, but could ultimately be detrimental to their financial future.
RELATED ARTICLES
Superannuation
Rest promotes Rachel O’Connor to head fixed income team
In a significant move within Australia's superannuation sector, Rest, one of the largest profit-to-member funds in the country, has announced the promotion of Rachel O'Connor to lead its Fixed Income ...Read more
Superannuation
Employment Hero raises concerns over superannuation bill's impact on small businesses
Employment Hero has raised significant concerns regarding the implementation of the proposed Supporting Choice in Superannuation and Other Measures Bill, which was recently recommended for passage by ...Read more
Superannuation
Rest calls for reform of superannuation rules for young workers
In a bold move to enhance the financial future of young Australians, superannuation fund Rest is advocating for the abolition of what it deems an "unfair and outdated" rule affecting under-18 workersRead more
Superannuation
Australians face readiness crisis as payday super reform looms
As the implementation date for one of Australia’s most significant superannuation reforms draws near, new research reveals a startling lack of awareness and preparedness among both businesses and ...Read more
Superannuation
Rest posts healthy returns following a positive end to 2025
Rest, one of Australia's largest profit-to-member superannuation funds, has reported impressive returns in its flagship MySuper Growth investment option for the year 2025. The fund is optimistic about ...Read more
Superannuation
Rest marks milestone with first private equity co-investment exit
In a significant development for Rest, one of Australia’s largest profit-to-member superannuation funds, the organisation has announced the successful completion of its first private equity ...Read more
Superannuation
Expanding super for under-18s could help close the gender super gap, says Rest
In a push to address the gender disparity in superannuation savings, Rest, one of Australia's largest profit-to-member superannuation funds, has called for a significant policy change that would allow ...Read more
Superannuation
Employment Hero pioneers real-time super payments with HeroClear integration
In a significant leap forward for Australia's payroll and superannuation systems, Employment Hero, in collaboration with Zepto and OZEDI, has successfully processed the country's first ...Read more
Superannuation
Rest promotes Rachel O’Connor to head fixed income team
In a significant move within Australia's superannuation sector, Rest, one of the largest profit-to-member funds in the country, has announced the promotion of Rachel O'Connor to lead its Fixed Income ...Read more
Superannuation
Employment Hero raises concerns over superannuation bill's impact on small businesses
Employment Hero has raised significant concerns regarding the implementation of the proposed Supporting Choice in Superannuation and Other Measures Bill, which was recently recommended for passage by ...Read more
Superannuation
Rest calls for reform of superannuation rules for young workers
In a bold move to enhance the financial future of young Australians, superannuation fund Rest is advocating for the abolition of what it deems an "unfair and outdated" rule affecting under-18 workersRead more
Superannuation
Australians face readiness crisis as payday super reform looms
As the implementation date for one of Australia’s most significant superannuation reforms draws near, new research reveals a startling lack of awareness and preparedness among both businesses and ...Read more
Superannuation
Rest posts healthy returns following a positive end to 2025
Rest, one of Australia's largest profit-to-member superannuation funds, has reported impressive returns in its flagship MySuper Growth investment option for the year 2025. The fund is optimistic about ...Read more
Superannuation
Rest marks milestone with first private equity co-investment exit
In a significant development for Rest, one of Australia’s largest profit-to-member superannuation funds, the organisation has announced the successful completion of its first private equity ...Read more
Superannuation
Expanding super for under-18s could help close the gender super gap, says Rest
In a push to address the gender disparity in superannuation savings, Rest, one of Australia's largest profit-to-member superannuation funds, has called for a significant policy change that would allow ...Read more
Superannuation
Employment Hero pioneers real-time super payments with HeroClear integration
In a significant leap forward for Australia's payroll and superannuation systems, Employment Hero, in collaboration with Zepto and OZEDI, has successfully processed the country's first ...Read more
