QUARTER I 2025 | ISSUE 049 | THE PREMIER SELF-MANAGED SUPER MAGAZINE
ILLEGAL EARLY ACCESS Finding a practical solution
FEATURE
COMPLIANCE
STRATEGY
COMPLIANCE
Illegal early access Addressing the problem
ATO guidance Regulator assistance
Legacy pensions The preferred path
Merchant’s case Key learnings
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COLUMNS Investing | 20 A different source for consistent income.
Investing | 24 Opportunities in small-cap buyouts.
Strategy | 28 Whether to use the legacy pension amnesty.
Compliance | 32 ATO guidance materials on offer.
Compliance | 38 What 2025 holds for the sector.
Compliance | 42 Obligations associated with SMSF pensions.
Strategy | 46 Conditions of the residency test.
Compliance | 50 Lessons from the Merchant case.
Strategy | 54 Ensuring correct death benefit allocations to family members.
Compliance | 58 Transfer duties for farm land divestitures.
REGULARS ILLEGAL EARLY ACCESS FINDING A SOLUTION Cover story | 12
FEATURE
What’s on | 3 News | 4 News in brief | 5 SMSFA | 6 CPA | 7 IFPA | 8 CAANZ | 9 IPA | 10 Regulation round-up | 11 Super events | 62
Compensation Scheme of Last Resort | 16 Industry calls for change.
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FROM THE EDITOR DARIN TYSON-CHAN INAUGURAL SMSF ASSOCIATION TRADE MEDIA JOURNALIST OF THE YEAR
A regulation sandwich The main event for the sector, the SMSF Association National Conference, has been completed for another year and one of the main talking points to emerge from it in 2025 was the uncertain predicament of some trustees as to whether they have to date illegitimately been operating as wholesale investors. The conundrum has resulted from an Australian Financial Complaints Authority (AFCA) determination that applied the strict interpretation of section 761G(6)(b) of the Corporations Act 2001 whereby a financial service provided that relates to a superannuation fund means the individual involved must be considered to be a retail investor. As such, any SMSF trustee or member must have assets totalling at least $10 million before they can be treated as a wholesale investor. Hard to argue with seeing the stance is pretty black and white from a legal perspective. But the Corporations Act contains a lower threshold whereby an individual with net assets of $2.5 million and a certificate from an accountant confirming this fact could be considered as a wholesale investor. However, an announcement from the Australian Securities and Investments Commission (ASIC) in 2014 is really what has thrown a spanner in the works. At that time, the regulator stated while it acknowledged SMSF trustees should strictly not be using this lower wholesale qualification parameter, it would not be allocating any enforcement resources to stamp out the practice. Naturally many SMSF trustees saw this as the green light for them to use the lower wholesale investor qualification mark, but now the AFCA decision has put them in uncertain territory. You might be asking why many trustees
would be so keen to be treated as wholesale investors and that is because it gives them the ability to access certain asset classes, such as infrastructure, not widely offered to retail investors. But now they find themselves basically pieces of meat in a regulation sandwich due to the fact two government bodies don’t seem to be on the same page. Worst-case scenario is if these trustees are not granted relief, they will have to divest the holdings they secured as wholesale investors and this of course will trigger capital gains tax liabilities. These won’t be insignificant if you consider a minimum investment for a retail managed fund might be $5000, whereas the qualifying amount for a wholesale fund could be $500,000. Further, while this is obviously an SMSF problem, the impact of what comes next will not be confined to this sector. Consider what will happen to the fund managers themselves if large amounts of money are having to be exited from their products pretty much all at once. How many of them will have the liquidity to facilitate this and will the offering actually be able to survive this scenario? If there is a positive note, it might be that the government will have to review the wholesale investor thresholds in the Corporations Act that have remained unchanged as they have no indexation measure built into them. The situation should also confirm, once and for all, how the wholesale investor rules apply to SMSF trustees. The SMSF Association is on the case and is already urging Canberra to come up with a legislative amendment to fix the problem. Hopefully the politicians will apply some common sense when formulating a solution as the stakes here are pretty high.
Editor Darin Tyson-Chan darin.tyson-chan@bmarkmedia.com.au Senior journalist Jason Spits Journalist Penny Pryor Sub-editor Taras Misko Head of events and corporate partnerships Cynthia O’Young c.oyoung@bmarkmedia.com.au Publisher Benchmark Media info@bmarkmedia.com.au Design and production AJRM Design Services
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WHAT’S ON SMSF Professionals Day 2025 Inquiries: Vicky Zhao (02) 8973 3315 or email: events@bmarkmedia.com.au
NSW 22 May 2025 Sydney Masonic Centre 66 Goulburn Street, Sydney
VIC 27 May 2025 Melbourne Convention and Exhibition Centre 1 Convention Centre Place, South Wharf
QLD
To have an upcoming event featured on the What’s On page, please contact darin.tyson-chan@bmarkmedia.com.au.
Super Quarterly Update 5 June 2025 Webinar 12:30pm-1:30pm AEST
Super Discussion Group June 2025 10 June 2025 Webinar 12:00pm-2:00pm AEST
NSW 10 June 2025 Karstens Level 1, 111 Harrington Street, Sydney 6:00pm-8:00pm AEST
VIC
29 May 2025 Pullman Brisbane King George Square Cnr Ann and Roma Streets, Brisbane
12 June 2025 The Veneto Club 119 Bulleen Road, Bulleen 6:00pm-8:00pm AEST
Institute of Financial Professionals Australia
Accurium
Inquiries: 1800 203 123 or email: info@ifpa.com.au
VIC 2025 Annual Conference 4 April 2025 Grand Hyatt Hotel 123 Collins Street, Melbourne
Super Discussion Group 8 April 2025 Webinar 12:00pm-2:00pm AEST
NSW 8 April 2025 Karstens Level 1, 111 Harrington Street, Sydney 6:00pm-8:00pm AEST
VIC 10 April 2025 The Veneto Club 119 Bulleen Road, Bulleen 6:00pm-8:00pm AEST
Code of Ethics: ASIC Decisions and Lessons 8 May 2025 Webinar 12:30pm-1:30pm AEST
Super Smart EOFY Strategies 22 May 2025 Webinar 12:30pm-1:30pm AEST
Inquiries: 1800 203 123 or enquiries@accurium.com.au
NALI/NALE and SMSFs: Impact on CGT and Contribution Caps 14 May 2025 Webinar 2:00pm-3:15pm AEST
Claiming ECPI in 2024/25: Be ready and get it right 14 May 2025 Webinar 2:00pm-3:15pm AEST
SMSFs investing in entities: The do’s and don’ts 11 June 2025 Webinar 2:00pm-3:15pm AEST
Small business CGT: Key insights & super strategies 18 June 2025 Webinar 2:00pm-3:15pm AEST
DBA Lawyers
SMSF Hot Topics
Inquiries: dba@dbanetwork.com.au
1 April 2025 Webinar 2:00pm-3:00pm AEST
SMSF Online Updates
Live Q&A – April 2025 3 April 2025 Webinar 2:00pm-3:00pm AEST
SMSF showdowns: Handling disputes and protecting your clients 9 April 2025 Webinar 2:00pm-3:15pm AEST
SMSF Pension Workshop: Compliance, Admin & Tax Insights 16 April 2025 Webinar 2:00pm-4:30pm AEST
SMSF Year-End Essentials 30 April 2025 Webinar 2:00pm-3:15pm AEST
Applying the NALE Rules: Practical Insights for SMSFs 7 May 2025 Webinar 2:00pm-3:15pm AEST
11 April 2025 12.00pm-1.30pm AEST 9 May 2025 12.00pm-1.30pm AEST 6 June 2025 12.00pm-1.30pm AEST
Heffron Inquiries: 1300 Heffron or email: events@heffron.com.au
SMSF Clinic 29 April 2025 Webinar 12:00pm-1:30pm AEST
Quarterly Technical Webinar 29 May 2025 Webinar 1:30pm-3:00pm AEST
2025 Windups – Tips & Tricks Webinar 5 June 2025 Webinar 11:30pm – 1:00pm AEST
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