The increasing importance of total super balance management.
Compliance | 32
Failing to make minimum pension payments.
Strategy | 36
Trustee structure choice.
Compliance | 40
Illegal early access versus loans to members.
Compliance | 44
Maintaining professional discipline.
Compliance | 48
A UK pension transfer development.
Strategy | 52
How to include cryptocurrency in an SMSF.
Compliance | 56
The machinations of changing fund trustees.
Compliance | 60
Residential property investment parameters.
REGULARS
FROM THE EDITOR DARIN TYSON-CHAN
INAUGURAL SMSF ASSOCIATION TRADE MEDIA JOURNALIST OF THE YEAR
Who knows what to believe
Just when we thought the proposed Division 296 tax was just about dead and buried, it’s back larger than life after the federal election result that materialised on 3 May. And what probably caught everybody by surprise was the result in the upper house, which now means the returned Labor government only needs the support of the Greens to get the bill to bring the new tax in passed.
And this is concerning considering the Greens are continuing to push for the threshold of the impost to be lowered to $2 million, albeit they are in favour of including an indexation lever should this demand be met.
So basically your guess is as good as mine as to how this will all play out. Treasurer Jim Chalmers has been resolute, saying the government has not changed its position with regard to the policy, meaning the implementation of a $3 million threshold with no indexation applied to it and a tax calculated on unrealised capital gains. But can we really believe this? This is exactly the same message that emanated from Prime Minister Anthony Albanese in his government’s first term about the Stage 3 tax cuts and we all know when they were finally implemented there were significant changes made to the measure.
Also, other statements the Treasurer has made about the proposal can only be considered as bald-faced lies and he has been called out by many industry bodies on them. The most staggering one being that no alternative calculation methods for the tax were put forward during the consultation period.
To this end, as far back as July last year the SMSF Association proposed using the 90-day bank bill rate as a proxy for actual taxable earnings in the measure instead of the method in the bill whereby a person’s opening total super balance in a particular financial year is subtracted from their closing balance with a few adjustments, incorporating the taxing of unrealised capital gains.
Adding to my scepticism with regard to what the end result will be is Chalmers’ seeming lack of understanding of how the tax works. When announcing the deferral measure that would apply to members, such as the Prime Minister, in defined benefit arrangements, the Treasurer said this allowance was made because it would not be fair to make a person in this situation pay a liability before they were able to access their superannuation money.
The fact is the Division 296 tax is one that is levied on the individual. It means the person who has to pay this tax can either pay it personally or via their super fund. As such, there would be nothing stopping an individual in a defined benefit fund paying it from their own pocket. This detail basically means there is no need to introduce the ability to defer the payment of this tax for one particular cohort. Doesn’t Chalmers know this?
None of the points above give me any confidence this policy will be amended for the better and in fact we could see changes based on political grounds making it even worse. Your guess is as good as mine how it will work out in the end, but my glass is definitely half empty.
To have an upcoming event featured on the What’s On page, please contact darin.tyson-chan@bmarkmedia.com.au.
Accurium
Inquiries:
1800 203 123 or enquiries@accurium.com.au
Practitioners Edge 2025
VIC
29 July 2025
Rydges Melbourne
186 Exhibition Street, Melbourne
NSW
31 July 2025
Four Seasons Hotel Sydney
199 George Street, Sydney
QLD
6 August 2025
Hotel Grand Chancellor Brisbane
23 Leichhardt Street, Spring Hill
Who controls the SMSF when a member dies?
9 July 2025
Webinar
2.00pm-3.15pm AEST
Dealing with super death benefits
23 July 2025
Webinar
2.00pm-3.15pm AEST
SMSF residency
13 August 2025
Webinar
2.00pm-3.15pm AEST
SMSFs and family law: navigating the split
27 August 2025
Webinar
2.00pm-3.15pm AEST
SMSF Association
Inquiries: events@smsfassociation.com
SMSF Association Technical
Summit 2025
6–7 August 2025
Sydney Masonic Centre
66 Goulburn Street, Sydney
The Auditors Institute
Inquiries: (02) 8315 7796
Superannuation and Estate Planning
12 August 2025
Webinar
1.00pm-2.00pm AEST
Technical session
16 August 2025
Webinar 1.00pm-2.00pm AEST
Institute of Financial Professionals
Australia
Inquiries: 1800 203 123 or email info@ifpa.com.au
Super Discussion Group
12 August 2025
Webinar 12.00pm-2.00pm AEST
NSW 12 August 2025
Karstens
Level 1, 111 Harrington Street, Sydney
6.00pm-8.00pm AEST
VIC
14 August 2025
The Veneto Club
119 Bulleen Road, Bulleen 6.00pm-8.00pm AEST
Super Quarterly Update
4 September 2025
Webinar 12.30pm-1.30pm AEST
SMSF Trustee Empowerment Day 2025
Inquiries: Vicky Zhao (02) 8973 3315 or events@bmarkmedia.com.au
NSW 16 September 2025
Sydney Masonic Centre 66 Goulburn Street, Sydney
VIC
18 September 2025
Melbourne Convention and Exhibition Centre 2 Clarendon Street, South Wharf
NCCs can be ignored for Div 296 earnings
By Darin Tyson-Chan
A senior superannuation executive has confirmed nonconcessional contributions can be ignored with regard to the calculation of earnings for the proposed Division 296 tax due to the role an individual’s total super balance has when they are looking to put money into their SMSF.
Under the proposed rules as to how members determine their Division 296 tax liability, contributions must be deducted in the earnings calculation.
“A lot of you might be looking at and thinking automatically [about] non-concessional contributions. No, [this is incorrect because] we’re dealing with people with [total super]
balances up and around $3 million here,” Colonial First State head of technical services Craig Day noted.
“Remember our nonconcessional contributions cap for a person with a total super balance over $2 million from 1 July this year will have a nonconcessional contributions cap next year of nil.”
With regard to such items having to be deducted from the Division 296 tax liability equation, Day pointed out advisers and trustees should just focus on transactions involving concessional contributions, downsizer contributions and small business capital gains tax contributions.
He also took the opportunity to highlight the difficulty allocations from reserves could
play in the process of determining the impost.
“It’s really important to note it’s only reserve allocations that count towards [an SMSF member’s] concessional [contributions] cap [that can be deducted from the earnings calculation],” he said.
“If you have a reserve allocation that doesn’t count towards the concessional or non-concessional [contributions] caps, then in that situation those amounts won’t be treated as contributions and will not be deducted back out [for Division 296 tax purposes].
“So a reserve allocation could actually look like earnings and be subject to taxation.”
He acknowledged this treatment of reserves could be problematic for SMSF trustees looking to allocate existing
Stopping legacy pensions won’t trigger social security debt
By Darin Tyson-Chan
The commutation of a legacy pension with asset exempt status under the fiveyear amnesty allowing SMSF members to do so will not have any long-term social security implications due to a change in the relevant regulations.
According to Smarter SMSF education and technical manager Tim Miller, the commutation of a legacy pension could result in the loss of the asset test exemption for the SMSF member receiving that income stream, which will in turn impact their ability to access Centrelink benefits.
Further, Miller recognised there was a danger, upon loss of the asset test exemption, the secretary of social security
could determine a member was never entitled to Centrelink benefits and make them pay back these types of monies received spanning the previous five years.
However, he pointed out fears of this scenario eventuating have been allayed.
“The [intent of the amnesty] was to ensure nobody gets a Centrelink debt out of commuting these pensions. But to [achieve] that [there needs to be] a waiver of debt for social security purposes. That waiver was introduced on 26 March, so we do have that,” he acknowledged.
“[It means] the secretary of social security will have the power to waive any debt subject to commuting an asset test exempt pension.”
He pointed out the regulations granting the secretary of social security this
reserves relating to a legacy pension back to the original recipient under the five-year amnesty allowing these types of income streams to be commuted.
This is because reserve allocations of this nature will not count towards any contributions cap and therefore will not be a deductible element in the Division 296 tax calculation.
“If we [allocate legacy pension reserves] after 1 July this year, if the [introduction of the Division 296 tax] is not deferred, then that will look like earnings,” Day said.
“So we’re left in kind of an unenviable position because if you wanted to avoid that situation, you really should be commuting that [legacy] pension and getting those reserves allocated before 30 June.
“But we don’t actually have law yet, so we’re left to doing things in the [expectation] these laws come through.”
discretionary power cannot take effect until a 15-day disallowance, or objection, period has expired. Given the current parliamentary sitting calendar, he anticipated the earliest this period would end is early September.
However, he recognised the waiver can be backdated to cover any commutations that took place from December 2024 onwards, but still recommended practitioners and trustees take the duration of this process into account before commuting any asset test exempt legacy pensions.
“So really what we’re saying with asset test exempt pensions is it will be a positive outcome for everybody. People will be able to commute their asset test exempt pensions, however, from a safety point of view, unless there’s an urgent reason, such as the health of the client and they want to unwind it to allocate the reserves out of the pension interest, it’s often better to potentially just hold fire on commuting asset test exempt pensions to this point in time,” he advised.
Bendel appeal granted
The ATO will seek to argue before the High Court that its position on the treatment of unpaid present entitlements (UPE) from a unit trust is correct after leave to appeal an earlier decision in the full Federal Court was granted recently.
The regulator was granted special leave to appeal the outcome of Commissioner of Taxation v Bendel [2025] FCAFC 15, which was handed down on 19 February and has since raised questions about whether unpaid present entitlements from unit trusts still qualify as loans under Division 7A of the Income Tax Assessment Act (ITAA) and in turn the Superannuation Industry (Supervision) (SIS) Act
The initial case challenged a longstanding ATO ruling based on the concept of a financial accommodation included in ITAA Division 7A and that a UPE was a loan from the recipient to the unit trust, however, the court narrowed the meaning of financial accommodation to exclude UPEs.
The case has implications for SMSFs due to commonalities between the ITAA and SIS Act where the expanded definition of loan in both is almost identical.
Digital asset body launched
A group of SMSF and digital asset experts has formed a new industry body aimed at helping the sector navigate their use in a responsible and compliant way.
The new body, known as the SMSF Innovation Council, was launched at the Australian Digital Economy Conference on the Gold Coast in June and is made up of 12 founding members who work as trustees,
accountants, auditors, fintech leaders and policy influencers in the SMSF, fintech and digital asset sectors.
The council is chaired by Kate Cooper, chief executive of cryptocurrency platform and onchain technology company OKX Australia, and also includes ASF Audits head of technical Shelley Banton as one of its members.
Cooper said the council was formed to offer the SMSF sector a non-commercial, industry-led forum to address governance, education and innovation gaps in its participation in digital assets.
Key areas of focus for the new organisation will be developing compliant frameworks enabling trustees to participate in the digital economy and providing tools and guidance to build confidence among the SMSF community to do so.
Legacy pension guidance released
The ATO has released its first formal guidance in regards to the rules around the commutation of legacy pensions and the changes to reserve allocations, opting to release them online, but the SMSF Association has noted more work needs to be done on them.
The regulator has released the guidance regarding commutations on its website, using Quick Code (QC) 105078, and reiterated that since 7 December 2024, lifetime annuities and pensions, life expectancy annuities and pensions, and market-linked annuities and pensions may all now be commuted under the five-year amnesty, which ends in 2029.
The new information noted the regulation introduced in December 2024 allows the commutation of these products, but it does not change how they currently operate.
“The regulation relaxes a restriction on what fund or product rules can
allow: it does not change fund or product rules themselves. Fund or product rules may need to be changed by the fund or provider to allow commutation before a recipient can commute without the fund breaching those rules,” the material stated.
Platform adds SMSF services
Investment platform moomoo Australia is set to launch a multifaceted service for the SMSF sector that will assist people with market trading, fund establishment, administration and compliance.
The move comes on the back of a survey moomoo Australia conducted among 153 share market investors, whereby 24 per cent of respondents indicated they were interested in setting up an SMSF but had not done so because the process was too complex, with a further 21 per cent saying it was too expensive for them to do so.
An additional motivating factor for the organisation to enter the space was the fact a further 24 per cent of participants admitted they would not know what an SMSF should invest in.
“There are clear, legitimate reasons that even those Australians familiar with share investing and interested in opening a self-managed super fund haven’t done so. We answer these concerns head-on with our trading account service, administration partner services and sophisticated investing resources,” moomoo Australia and New Zealand chief executive Michael McCarthy noted.
In launching its SMSF service, the platform provider is also looking to deliver artificial intelligence (AI) capabilities to trustees. This objective is in line with the survey result that showed 67 per cent of share traders would use AI in their SMSF investment activities.
The intergenerational Division 296 fallout
PETER BURGESS is chief executive of the SMSF Association.
Federal Treasurer Jim Chalmers was at it again recently in vainly attempting to defend the indefensible – the Division 296 tax. His characterisation of the policy as impacting only a “tiny and wealthy minority” of SMSFs who can afford to pay conveniently ignores the broader consequences and inherent unfairness of this tax.
The Treasurer’s framing distracts from the two most concerning features of the tax: its application to unrealised gains and the refusal to index the $3 million threshold. These elements would erode the integrity of our retirement savings system and punish prudent longterm investors.
Chalmers is right about the measure initially affecting only about 80,000 superannuants. But this snapshot is rapidly becoming outdated. The demographics of the SMSF community are shifting and with them investment behaviour.
As ATO statistics highlight, while the SMSF population is dominated by those over 60, younger Australians are now driving fund establishments.
In the quarter to 31 March 2025, the largest cohort establishing SMSFs were aged between 35 to 49, accounting for 56 per cent of all new SMSFs set up, followed by those aged between 50 and 59, who made up 24 per cent of new funds.
This demographic shift signals more SMSF members will be in accumulation phase for longer, building wealth through long-term investment. As younger members grow their balances over decades, more will cross the arbitrary $3 million threshold, not because they are wealthy elites, but because they’ve made responsible financial decisions.
Research house CoreData has also overlayed these SMSF demographic trends with investment preferences to consider some further implications. These younger SMSF members can be expected to invest differently, being more likely to invest ethically than those nearing or in retirement, who are more likely to be focused on capital security and income.
In considering their upcoming investments, of those under 49 years of age, 27 per cent were more likely to invest responsibly, 53 per cent were neutral and 12 per cent less likely.
Another interesting aspect to the CoreData numbers is that the larger the portfolio balance, the more importance is placed on an investment being ethical or responsible.
These are the very investors with the patient capital
who are prepared to participate in early-stage funding projects aligned with positive environmental and social outcomes, including healthcare, recycling, renewables, information technology, ag-tech and biomedical research. This is exactly the sort of funding these sectors need and the government is urging.
Big Australian Prudential Regulation Authorityregulated super funds aren’t a substitute as typically the licks of capital required are simply too small to make it a suitable investment option. But for a nimble SMSF sector, these investment opportunities can be viable in a balanced portfolio, with the Department of Industry’s statistics showing SMSFs in 2023/24 were the third largest investor group by numbers in venture capital limited partnerships.
Chalmers’ response to the loss of this potential investment capital is to say the void will be filled by others, but who are they? To date there has been no answer forthcoming.
It’s not just new business ventures seeking angel capital that will be affected. Business owners and primary producers have long held their business premises or farmland in SMSFs, about $100 billion worth, and on our numbers about 17,000 will be hit hard by this proposed tax.
This isn’t hypothetical. Industry research estimated that if this tax had been in place in the 2023 financial year, the average extra tax bill for those affected would have been $50,000 – not a modest amount.
And the impact is broader still. Even SMSF members well below the $3 million mark are reacting to the complexity and uncertainty of the proposed regime. We are hearing growing anecdotal evidence of members liquidating assets or withdrawing entirely from the SMSF system out of fear.
Superannuation has played a crucial role in securing Australians’ financial futures for over a century. Yet no policy has so brazenly undermined its core purpose, or so shamelessly targeted SMSFs, as Division 296.
The last time we saw a proposal this tone deaf to long-term savings was Labor’s failed plan to abolish franking credit refunds. That proposal helped lose them an election. With Labor now re-elected, the reality of Division 296 is no longer hypothetical and its political and economic risks are becoming increasingly real.
And it’s not just us saying this. Former prime minister and Labor icon Paul Keating has called taxing unrealised capital gains and the ruling out of indexation as “unconscionable”. Jim Chalmers, please take note.
Five key SMSF challenges
is
As we reach a new financial year, the environment within which funds need to operate is evolving at a frantic pace. Trustees and advisers are forced to navigate the treacherous headwaters of change shaped by legislative uncertainty, increased regulatory scrutiny and technological transformation. Five pressing issues face SMSF trustees right now and the pressure is on to ensure funds are able to continue to operate in the face of these pressures.
The looming Division 296 tax
The proposed Division 296 tax is occupying most of the present discussion and this would see an additional 15 per cent tax imposed on earnings for individuals with total super balances exceeding $3 million. Although the legislation is yet to pass, it is slated for commencement on 1 July 2025.
It is expected there will be around 80,000 affected members of superannuation funds, reflecting 0.5 per cent of members, however, as the threshold is not indexed, more are likely to be affected in the future. High-balance SMSF members need to consider the possible implications now, particularly considering unrealised gains are likely to be taxed. Members who are not yet likely to be caught, but may be in the future, should also consider how this might affect them, particularly if decisions are being made involving preserved funds. Trustees should begin liquidity planning now, including reviewing asset allocations, especially cash, considering recontributions and modelling potential tax impacts. Advisers must play a crucial role in helping clients understand the implications and prepare for possible outcomes. Advisers should also consider how the changing liquidity needs of funds may impact the other members not necessarily facing a Division 296 tax liability.
ATO scrutiny is increasing
The ATO has progressively intensified its oversight of SMSFs with a sharp focus on compliance. Key areas under the microscope in recent times include asset valuations, investment strategy alignment and auditor independence.
A heavy recent focus by the ATO has been on ensuring trustees make certain all assets, especially property and collectibles, are valued accurately and supported by appropriate documentation. Additionally, the regulator expects trustees will make a clear link visible between the fund’s strategy and its actual investments.
While this is going on, new rules require stricter separation between SMSF auditors and other service providers.
Trustees need to conduct regular compliance reviews and maintain meticulous records. A proactive approach will prevent costly penalties.
Auditor shortages creating a bottleneck
The SMSF sector is experiencing a significant auditor shortage driven by increased demand and a shrinking pool of qualified professionals. This has, in turn, led to rising audit fees, often exceeding $1000 per fund, as well as delays in audit completion. These can affect meeting other serious deadlines, such as a fund’s lodgement date.
Auditors may need to be engaged as early as possible in the financial year to avoid disappointments and multi-year arrangements should be considered.
Changes from 1 July 2025
Several superannuation changes are set to take effect from 1 July 2025, including the super guarantee (SG) finally increasing to 12 per cent, super contributions being paid on government paid parental leave for eligible recipients and a rise in the general transfer balance cap from $1.9 million to $2 million.
The concessional contributions cap remains at $30,000, having only been indexed last year from $27,500.
These changes present both opportunities and challenges. Members should consider revisiting contribution strategies, especially if nearing retirement. Advisers may be able to add value to help optimise outcomes through tailored planning opportunities.
Digital disruption
SMSF administration is presently accelerating as a result of digital transformation. Cloud-based platforms now offer real-time reporting, automated compliance checks and seamless integration with banks and brokers. Meanwhile, the ATO’s data-matching capabilities are more sophisticated than ever.
Trustees must embrace this shift by adopting digital tools that enhance transparency and efficiency. Staying paper based is no longer viable in a world where the ATO can detect discrepancies almost instantly.
Final thoughts
The SMSF landscape in 2025 is dynamic and demanding. Trustees who stay informed, embrace technology and seek expert advice will be best positioned to thrive. Whether it’s preparing for new taxes, navigating compliance or leveraging digital tools, the key is to act early and often.
For advisers, this is a pivotal moment to demonstrate value by guiding clients through complexity and helping them make confident and compliant decisions.
RICHARD WEBB
superannuation lead at CPA Australia.
A tax on fairness, not just wealth
With the federal election now behind us and Labor securing majority government, the controversial Division 296 tax is expected to be one of the first legislative priorities when parliament resumes on 22 July. While the government will likely have the numbers to pass the measure with Greens support, having political momentum to pass the bill does not mean the proposal deserves to pass or is good policy.
For those of us who have been at the coalface of the consultation process, the concerns surrounding the Division 296 impost have always gone far beyond the politics of ‘the rich should pay more tax’. This debate is not about whether large superannuation balances should attract more tax; it’s about how that impost is designed and whether it preserves the integrity, fairness and confidence in the super system itself.
The government’s proposal to tax unrealised capital gains on total super balances above $3 million remains the most troubling element of the package. Not only does this represent a fundamental shift in the way Australia taxes investment returns, but it also exposes affected super fund members, particularly those in SMSFs with illiquid assets, to annual tax liabilities on paper gains that may never materialise.
Adding insult to injury, the $3 million threshold is not indexed, meaning more Australians will be caught over time due to inflation alone. The government has repeatedly claimed no workable alternatives have been put forward, but that’s simply not true. Industry bodies, including the Institute of Financial Professionals Australia, have provided credible, practical alternatives, including taxing actual realised earnings above the threshold, an approach that aligns with long-standing tax principles and existing reporting frameworks.
While recent media reports suggest Prime Minister Anthony Albanese may be open to negotiating with the coalition, possibly by scrapping the tax on unrealised gains or introducing indexation, Treasurer Jim Chalmers remains resolute. Chalmers claims the current design is Treasury’s recommended approach, asserting that after years of consultation no better alternative has emerged. In reality, the consultation process has often felt like window dressing, with Treasury unwilling to engage meaningfully on the proposal’s most contentious aspects.
From the outset the industry was told key components, including the $3 million cap, lack of
indexation and the method of calculation, were nonnegotiable. Stakeholders were left to provide input on peripheral issues rather than the fundamental design flaws. Even when we raised critical concerns at Senate committee hearings and Treasury roundtables, the response was tepid at best.
Treasury’s justification the Division 296 tax achieves sector neutrality across Australian Prudential Regulation Authority-regulated funds, SMSFs and defined benefit schemes is, frankly, unrealistic. These sectors operate under vastly different valuation methodologies, making true neutrality impossible. Instead, what we will get is significant inequity between fund types. Defined benefit members will face deferred, complex tax calculations. Constitutionally protected funds may be exempt altogether. Meanwhile, SMSF members holding assets such as property will be taxed annually on unrealised gains, creating significant cash-flow pressure and potential double taxation when the asset is eventually sold.
It’s worth repeating this is not about protecting the wealthy from paying tax. It’s about ensuring the way we tax them is fair, coherent and proportionate. We have contributed to superannuation under one set of rules, making long-term decisions on that basis. Changing the rules in a way that disadvantages some while exempting others undermines the entire foundation of trust in our retirement system.
If anything the Division 296 measure highlights the need for a proper, holistic review of the tax and superannuation framework. We cannot continue to make piecemeal changes in response to short-term revenue needs or populist politics. We deserve better.
Advisers need to prepare clients for the likely introduction of this tax, but there’s no need for immediate action. The critical date for assessing super balances is 30 June 2026, not 2025, so decisions should be considered carefully, not made in haste.
We must continue to advocate for reform that prioritises fairness over political expedience. Whether the government strikes a deal with the coalition or the Greens, or pushes ahead with its original proposal, the Division 296 tax as it stands risks introducing unnecessary complexity, systemic inequities and long-term damage to confidence in Australia’s superannuation system.
Tax policy should be built on principle and not expediency. The proposed Division 296 policy, in its current form, fails that test.
NATASHA PANAGIS is head of superannuation and financial services at the Institute of Financial Professionals Australia.
Busy times ahead
It is said sometimes that “retirement is another country”. Based on my observations of relatives and friends who have retired, this statement appears to be true.
A similar sentiment could be made about an election result, even if the previous political party wins that contest. Maybe we could say: “The government after an election is another country.”
Given the recent clear federal election result, it is reasonable to conclude the next term of government will be extremely busy from a policy settings perspective. Here is my rough list of just some of the issues we will grapple with over the next two to three years:
• Better Targeted Superannuation Tax Concessions or Division 296: It certainly appears this will become law. Clients will rely a lot on their accountants and financial advisers to effectively manage the impact of this new tax. Many poor design features of the measure have been well aired in this publication and elsewhere. But like all complex policy changes, some of the problems with the Division 296 tax are unknown and will only come to light once individuals start to implement this change in their lives. I expect over time the policy settings of this impost will need to be adjusted, creating more work for everyone.
• Payday (PD) superannuation: This represents a significant change for all employers as most of them currently make superannuation contributions less frequently than their normal salary and wage pay cycle. As this implies, PD super means operational and cash-flow changes. There are many current design features of PD super that we think can be improved. At the moment, this policy starts after June 2026.
Employers, payroll system providers, other superannuation service providers and super funds have a lot of work to do to ensure PD super will work properly from its commencement date.
• Delivering Better Financial Outcomes reforms: This remains a work in progress and some important design features are currently unknown. Based on what we have seen, it would appear financial advice will remain a service mainly used by higher net worth individuals and their families. Sadly, many people seeking advice will be unable to access it due to there being too few financial advisers. Some of this might
be helped by the review of financial adviser education standards, but the problem won’t be solved overnight. The government also needs to review and adjust the financial advice code of ethics.
• Accountants and financial advice: We were pleased with the coalition’s election campaign policy announcement that it would permit accountants in public practice to provide financial advice to their clients. This is a policy area the returned Albanese government needs to urgently address so the already mentioned unmet advice needs can be partly addressed.
• Non-arm’s-length income (NALI): In the near future, the ATO will publish its final ruling about NALI and related changes for superannuation contributions. This has been a complex area for many years. We hope the final rulings the regulator issues will take into account the concerns we expressed about the draft rulings when they were released some time ago.
• Commencing and ceasing pensions: The revised ATO ruling issued over 12 months ago contains views about when a pension is deemed to have ceased with which we do not agree. We hope the regulator can find a way to adjust its view so a workable solution can be found. Failing that, legislative or regulatory amendments may be essential.
• Tax deductibility of financial advice fees: We were pleased when the ATO issued its revised taxation determination on this subject last year. Chartered Accountants Australia and New Zealand jointly published a guide on this topic with the Financial Advice Association Australia, CPA Australia and the Institute of Public Accountants. This guide will assist financial advisers to implement these rules in their practices. It will also help accountants and tax agents in general to understand what financial advice fees clients can claim as a tax deduction.
This brief list is a mere summary of what is on our radar. We are also keeping watch on changes to the Compensation Scheme of Last Resort, changes made to financial services laws to combat financial abuse, superannuation service standards, and wholesale and sophisticated investor policy settings.
In short, buckle up. It’s going to be busy.
TONY NEGLINE is superannuation and financial services leader at Chartered Accountants Australia and New Zealand.
Introduction of a revised penalties regime
LETTY CHEN is tax and super adviser at the Institute of Public Accountants.
The proposed regime commonly known as payday super (PDS) will reform the superannuation guarantee (SG) framework to align the payment of these contributions with the payment of salary or wages, usually monthly, fortnightly or weekly, instead of the current quarterly basis. PDS will compel employers to pay SG contributions and submit employee data on or soon after the ‘qualifying earnings’ (QE) day, or payday, such that the superannuation fund receives and is able to allocate the contribution to the employee’s account within seven calendar days of this day.
Under PDS, the SG penalty system will be overhauled. Some of the key differences between the current and proposed penalty rules include the following:
• the new notional earnings component will be calculated by reference to the general interest charge (GIC) rate, currently 11.17 per cent, and replaces the nominal interest component, fixed at 10 per cent,
• the current ‘administration component’ of $20 per employee per quarter will be replaced with an ‘administrative uplift amount’ applied at a maximum of 60 per cent of the sum of the SG shortfall and notional earnings components,
• a new late payment penalty will replace the current Part 7 penalty of up to 200 per cent of the SG charge,
• unlike the Part 7 penalty, the tax commissioner will not have the power to remit the new late payment penalty,
• the mandatory SG statement will be replaced with a voluntary disclosure statement, which may reduce the administrative uplift component,
• the SG charge will become deductible, and
• GIC will cease to be deductible from 1 July 2025, but this change is not part of PDS.
The joint bodies, made up of the Australian Bookkeepers Association, Chartered Accountants Australia and New Zealand, CPA Australia, Financial Advice Association Australia, Institute of Certified Bookkeepers, Institute of Public Accountants, SMSF Association and The Tax Institute, recently lodged a joint submission to Treasury canvassing the following concerns relating to the proposed penalty regime:
1. The employer’s obligation is satisfied only when the contribution is received and capable of allocation rather than upon payment. Employers may be liable for the SG charge due to events outside their control, including third-party processing times, employees providing incorrect information and business disruptions such as internet outages, which is fundamentally unfair.
2. If an SG charge remains unpaid for more than 28 days,
the commissioner must give the employer a notice requiring payment ‘as soon as practicable’, but there is no statutory timeframe. Employers may be unaware they have a shortfall where it arose unintentionally or mistakenly. The impact of accruing penalties and interest is compounded if there are delays in the ATO providing notice to these employers, resulting in unfair outcomes.
3. In calculating notional earnings, a late contribution is always taken to be received by the fund seven days after the employer pays it. Where the fund in fact receives it earlier, the effect of this inflexible deeming rule is that the notional earnings component would be higher than it should be.
4. A contribution will be automatically applied to reduce a shortfall and not firstly to the current QE day. This could result in unintended underpayments for successive QE days.
5. There is no distinction between an SG shortfall arising inadvertently or deliberately. The late payment penalty, at the rate of 25 per cent or 50 per cent, is a significant reduction from the current Part 7 penalty of up to 200 per cent of the SG charge, however, the joint bodies are concerned about the potential absence of the principle of fairness where excessive punishment is imposed for unintentional or accidental underpayment.
6. Unlike the Part 7 penalty, the commissioner will not have the power to remit the new late payment penalty. The joint bodies are concerned the absence of a power of remission unfairly punishes employers in circumstances where a full or partial remission could be justified.
7. An additional 20 per cent reduction of the administrative uplift amount applies only where the employer has not had a commissioner-initiated assessment in the past 24 months. Even where an employer lodges a voluntary disclosure statement in good faith, inadvertent errors may cause the commissioner to initiate an assessment, irrespective of the extent and nature of the employer’s culpability. Further, with no timeframe within which the commissioner must initiate an assessment, an inadvertent underpayment from many years ago may deny an otherwise compliant employer the additional reduction.
The joint bodies made 22 recommendations, some of which address the above issues. The recommendations include a postponement of the start date by at least 12 months, but ideally 24 months, to allow sufficient time for concerns to be addressed and for stakeholders to be ready to comply.
NICHOLAS ALI
is SMSF technical services director at NEO Super.
Payday super draft legislation
On 14 March, Treasury released payday super draft legislation, which is a rewrite of the superannuation guarantee (SG) (including the SG charge (SGC)) framework, requiring contributions to be received by employees’ super funds within seven calendar days from the date of salary and wages payment.
The draft law, scheduled for commencement on 1 July 2026, requires more frequent contributions, prompt dealings with superannuation bouncebacks and timely identification and reporting of compliance breaches to the ATO.
Under the draft bill, employers will avoid an SGC liability if they meet three key obligations:
• the organisation accurately calculates each employee’s ‘individual SG amount’ (prevailing SG rate multiplied by ‘qualifying earnings’),
• the required contributions are timely whereby contributions must now be made to superannuation funds before the end of the seventh calendar day after the payment of ‘qualifying earnings’ (known as the ‘QE day’), and
• comply with choice-of-fund requirements, considering changes to streamline the onboarding process, which could commence prior to 1 July 2026.
Qualifying earnings include any sacrificed amounts where the individual has reduced applicable earnings for superannuation contributions.
GIC and SIC deductions removed
The Treasury Laws Amendment (Tax Incentives and Integrity) Bill 2025 amends the ATO general interest charge (GIC) and shortfall interest charge (SIC) such that they will no longer be tax deductible from 1 July 2025.
This change increases the cost of non-compliance and late payments with the following impacted:
• employers paying SG late,
• SMSFs with late or amended returns, and
• members incorrectly claiming super deductions.
Any GIC or SIC incurred prior to 1 July 2025 is not impacted by the changes to the law and will continue to be deductible for the 2024/25 and earlier income years.
Legacy pension amnesty: social security debt waiver instrument
The Treasury Laws Amendment (Legacy Retirement Product Commutations and Reserves) Regulations 2024, which commenced on 7 December 2024, provide a pathway for members with certain legacy products to commute their income streams.
However, the current Social Security Act allows a clawback of five years’ Centrelink benefits if the commutation resulted in the member being subject to a higher asset test, which would reduce their
Centrelink eligibility.
A Centrelink debt could also arise where changes are made to the contract, or governing rules, for legacy pension products to enable the commutation of that income stream to take place.
This will also cause the legacy pension product to no longer be an asset test exempt income stream even where a social security recipient elects not to commute their legacy pension. Technically the income stream ceases to be asset test exempt from the time the commutation ability was made available to them.
The Social Security (Waiver of Debts – Legacy Product Conversions) Specification 2025 will ensure that debts raised under both these scenarios are waived.
This specification does not take legal effect until the conclusion of a disallowance period, the timing of which is currently uncertain, given the new parliament has yet to convene and the sitting calendar yet to be confirmed.
Treasury has released draft legislation on the next tranche of the government’s financial advice reforms. These measures are supposed to achieve the following:
• replace the statement of advice with a more fit-forpurpose client advice record,
• provide clear rules on what advice topics can be collectively charged for via superannuation, and
• allow large superannuation funds to provide targeted prompts to members to drive greater engagement with super at key life stages.
Concerns around the exposure draft centre on the view that large superannuation funds can deduct advice costs from member accounts, something not available to financial advisers who must charge clients directly and meet strict disclosure requirements.
Feedback on the exposure draft closed 2 May.
Transfer balance cap indexation
From 1 July 2025, the transfer balance cap will rise from $1.9 million to $2 million.
This has ramifications for the total super balance and the non-concessional contribution cap bringforward rules as follows:
• Less than $1.76 million $360,000
• $1.76 million to under $1.88 million $240,000
• $1.88 million to under $2 million $120,000
• $2 million and over $0
Rise in super guarantee to 12 per cent
From 1 July 2025, the super guarantee will increase from 11.5 per cent to 12 per cent.
a watershed moment the merchant case
A recent legal event has been shown to be a classic example of how SMSF compliance issues can arise from what on the surface would appear to be a legitimate fund transaction. Jason Spits assesses the Merchant case and the lessons it presents for practitioners and trustees.
It is said there are two ways to learn from experience – by looking at your own or by looking at that of someone else. The latter is often quicker and cheaper and the events involved in the case of Gordon Merchant versus the ATO certainly offer a salutary lesson for SMSF practitioners and trustees when it comes to transactions with related parties.
Given the events behind it took place more than a decade ago and the legal action related to them has stretched over the past four years, the facts of the case may be familiar (see: The Merchant case below), including the fact Merchant was disqualified for breaching the Superannuation Industry (Supervision) (SIS) Act and that action was later overturned.
While an examination of the parts of the issue is worthwhile – the breaches regarding the sole purpose test, provision of financial assistance and investment strategy all offer their own lessons – it is also important to note the wider takeaway messages for SMSF practitioners and trustees.
What’s the big deal?
At the centre of the legal action is a relatedparty acquisition of $5.8 million of shares in surf-wear company Billabong by Merchant’s SMSF, the Gordon Merchant Super Fund (GMSF), from the Merchant Family Trust (MFT).
It is a sizeable transaction for a singlemember fund, but perhaps not that large in the context of an SMSF, and it was unlikely to have been an issue for the ATO, according to Cooper Grace Ward partner Scott HayBartlem.
“The size of the transaction was a tax matter, but its scale would not have been an issue for the ATO when considering the role of the
SMSF. They looked at superannuation law, not tax law, and it was about the principles that applied,” Hay-Bartlem explains.
It is a view shared by Sladen Legal principal Phil Broderick, who recognises the transaction between the MFT and GMSF was about an attempt to trade off capital losses and gains.
“There is clear evidence there was advice to crystallise those losses and gains and if the transaction was smaller and with similar evidence, we can assume the ATO would have taken a similar approach,” Broderick notes.
Cooper Partners director and head of SMSF and succession Jemma Sanderson points out that while Part IVA has been a key issue in the case, and an appeal against that finding was rejected in April this year, the regulator took a wider view when it came to the role of Merchant and his SMSF in the transaction.
“The ATO wanted some accountability from those involved, including those who provided advice, and a key takeaway from this case is the need for documentation and evidence around the connections an SMSF may have in a group structure,” Sanderson states.
The parts of the sum
As mentioned, the other part of the transaction included a family unit trust and DBA Lawyers special counsel Bryce Figot summarises the events as being a “classic wash sale” where the same entity sells and buys a stock, and, in this case, used the SMSF as a clearing house.
“This was a wash sale because there was no change in the ownership and it became a superannuation compliance problem because it used an SMSF, which is a highly regulated vehicle,” Figot says.
Broderick adds that Merchant argued the
shares purchased had been undervalued by the market and he could see them gaining value in the future, but the ATO and the Administrative Appeals Tribunal (AAT) rejected that view because the transaction did not fit the sole purpose test.
“With Merchant there is a potential argument that there was an objective purpose, to acquire the shares, and that had a subjective purpose, to gain a tax offset, which could be overlooked,” he explains.
“However, the AAT found the purpose was to crystallise a loss and there was no evidence to support Merchant’s thought process.
“The lesson here is if you have an objective purpose for an action within an SMSF, it must be done to provide retirement or death benefits to members and that must override any subjective motives, such as moving property or assets into the fund.”
Hay-Bartlem points out that where evidence was available it was not favourable to Merchant’s argument and proved the ATO’s point.
“His claim regarding compliance with the sole purpose test failed because there was no evidence it had been considered and the transaction was done for other purposes related to the MFT. If there had been notes or advice to the SMSF as to why this was a good move, it would have been a better argument,” he says.
“The lack of evidence went against him and showed the investment strategy was not aligned, nor reviewed and the transaction did not fit the sole purpose test and he was unable to explain why his SMSF took on the loss and
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“The ATO wanted some accountability from those involved, including those who provided advice, and a key takeaway from this case is the need for documentation and evidence around the connections an SMSF may have in a group structure.”
– Jemma Sanderson, Cooper Partners
FEATURE A WATERSHED MOMENT
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depleted its funds to acquire the shares.
“The requirements under section 34 of the SIS Act are that an SMSF must have an investment strategy and regularly review it and provide reasons as to why it has chosen that approach and, in this case, it showed none of that so the AAT found the dominant purpose was centred around the capital gain and loss.”
By contrast, Sanderson notes the case of BPFN and Commissioner of Taxation [2023] AATA 2330 is a good comparison of how to document transactions and relationships between SMSFs and other entities.
In that case, an SMSF made a series of loans via a wholly owned unit trust to two other related entities and then onto an unrelated third party for the purpose of property development, leading the ATO to claim it breached the non-arm’s-length income provisions. This view was not sustained by the AAT as the SMSF trustee had set up each entity at arm’s length and fully documented the transactions.
“The BPFN case had the documents to prove the relationships were in place before the execution of the transactions, while Merchant seems to have overlooked the SMSF, highlighting that it’s better to get advice in advance, rather than backfill, and to document everything because it can be hard to remember,” Sanderson advises.
She suggests given the ATO was able to argue the transaction at the centre of the case was not compliant with the sole purpose test and investment strategy of the SMSF, the breach of section 65 of the SIS Act regarding financial assistance to members was always going to be on the table.
“Financial assistance via loans or illegal early
“This was a wash sale because there was no change in the ownership and it became a superannuation compliance problem because it used an SMSF, which is a highly regulated vehicle.” – Bryce Figot, DBA Lawyers
release is an area of high scrutiny for the ATO when looking at the actions of trustees and auditors,” she explains.
“This is not just an issue in the Merchant case because of the large figures involved, but because it is a big issue for the regulator. We did not see a breach of the in-house asset rules, which often goes with a section 65 breach, but there was a tax benefit to a member.”
According to Figot, the assistance may not be obvious on a strict reading of the law, but the ATO considered where the law applied.
“The SIS Act states a super fund can’t lend money or give financial assistance to a member of the fund or a relative of the member of the fund, so it’s a narrow provision,” he says.
“Here the assistance was given to the MFT so it flowed to a member or relative of the member. The ATO explained how this operates in SMSF Ruling 2008/1 where it gave an example of Les and Merle, which stated if a benefit is passed on, then it was an assistance issue.”
Hay-Bartlem adds: “Section 65 covers direct and indirect assistance and we have seen other cases where entities are involved. In Merchant there is a direct line of connections and trustees should avoid being ‘too cute’ about their links with other entities unless they can provide a legitimate purpose.”
The issues involving the sole purpose test, financial assistance and the investment strategy, and the paucity of documentation showing Merchant had not engaged in a transaction that breached those rules, made it unsurprising the ATO disqualified him from acting as the trustee of an SMSF.
Of importance though was how he went about having that decision overturned by
arguing he was not a danger to his fund or the wider SMSF and super system, and providing documented reasons to support that view.
To do so, Merchant successfully put forward that the contraventions of the SIS Act only related to a single course of conduct and there was no evidence he had been advised the transactions would cause those breaches. Additionally, as he was the only director of the trustee of his SMSF, the public did not need protection from him and there was no useful purpose in disqualifying him, and he would have all future transactions reviewed and all documents available to the ATO on request.
Broderick recognises the ATO’s response to the AAT’s decision to overturn the disqualification was muted, but the latter was correct in its course of action.
“The ATO has to accept the AAT’s decision to overturn the disqualification for what it is. If this type of transaction had been done each year, then he should be banned permanently, but it was agreed this was a one-off event compared with most disqualifications that involve multiple and repeated offences,” he explains.
This has been further highlighted in more recent attempts to have a disqualification overturned, particularly in the matters of Coronica and Commissioner of Taxation (Taxation) [2024] AATA 2592 and Omibiyi and Commissioner of Taxation (Taxation and business) [2025] ARTA.
The trustees in these cases tried to claim they were similar to Merchant because they also had breaches of section 62 and 65 of the SIS Act, among a number of other problems, but the tribunal rejected that view due to the repeated and serious nature of the breaches.
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The sum of the parts
While the Merchant case has plenty of moving parts, Figot says it raises the issue of what advisers are told and what they need to know.
“Clients can tell you true facts, but are there other facts, extra facts you should be told because what else do you need to know,” he says.
“So how deep do you dig? A good rule of thumb is how would the arrangement or transaction within an SMSF look to an unsympathetic ATO officer with full oversight who has the power to compel you to provide whatever information they require?
“A trustee or an adviser may take a
The Merchant case
When reference is made to the Merchant case, it’s worth asking: Which one? Like a number of landmark legal cases in the SMSF sector, the interaction between Gordon Merchant, the founder of the Billabong surf-wear group, and the ATO has not been a one-off, with the two parties heading to court on four occasions.
The first interaction was before the Administrative Appeals Tribunal (AAT) in April 2021 (Merchant and Commissioner of Taxation [2021] AATA 915), the second before the Federal Court in May 2024 (Merchant v Commissioner of Taxation [2024] FCA 498), the third, concurrent with the second
“If this type of transaction had been done each year, then he should be banned permanently, but it was agreed this was a one-off event compared with most disqualifications that involve multiple and repeated offences.”
– Phil Broderick, Sladen Legal
sympathetic view, but how is it going to look to that ATO officer?”
Hay-Bartlem concurs this consideration is critical when those providing advice may also be on the hook for the failure of a trustee.
“There were a few cases where advisers got in trouble because they didn’t give advice, while in another disqualification case the trustee said they had asked their adviser first, but there was no evidence that was true or that the adviser was retained to give advice,” he states.
“If your client asks about certain things, you’re going to give a particular answer. When you change the scenario, they are likely to tell you something different, so you have to be careful and make sure you’ve asked enough
but before the AAT again (Merchant and Commissioner of Taxation [2024] AATA 1102) and the fourth before the full bench of the Federal Court in April 2025 (Merchant v Commissioner of Taxation [2025] FCAFC 56).
With these ongoing legal proceedings it may be difficult to track what the relevant issues are and why the SMSF sector now has another case to serve as an exemplar of what not to do, but it is the third case, Merchant and Commissioner of Taxation that has gained most attention and where the lessons for SMSF advisers and trustees are being drawn from.
In short, Merchant entered into a transaction in 2014 where his SMSF bought $5.8 million worth of Billabong Limited shares, as the company was listed at the time, from his family trust at market value.
This stand-alone transaction complied with
questions such as: Why are you doing it? What are you trying to achieve and how’s it going to work?
“There have been so many times situations like Merchant could have been turned around if everything had been documented properly.
“Often I find, in SMSF world, people have the right things in their heads that they have never written down and one of the big lessons from the case is making sure all of the necessary documentation is under control.
“People also don’t realise the importance of doing it and don’t think about the fact they may be called on in court or called before the ATO to justify this decision, and that could be some years down the track, and where they will turn to refute a claim against them.”
section 66(2) of the Superannuation Industry (Supervision) (SIS) Act, which allows SMSFs to acquire listed shares from a related party at market value.
The ATO, however, contended the transaction was part of a wider strategy to crystallise a capital loss in the trust of $56.5 million to offset a gain from the sale of an investment in biodegradable plastics manufacturer Plantic Technologies, while also retaining ownership of Billabong shares in the broader Merchant group.
While the cases in the Federal Court examined the issue of whether Part IVA of the Income Tax Assessment Act was relevant and ruled it was, the cases before the AAT saw the ATO successfully argue the transaction was carried out to benefit the family trust rather than the SMSF and there had been multiple breaches of the SIS Act.
THE UNWANTED
SMSFs are a wonderful and effective vehicle allowing many people to grow their retirement savings, but unfortunately they can also be used as a tool for financial abuse. Penny Pryor examines the situation and the steps being taken to address it.
Late last year, the Parliamentary Joint Committee (PJC) on Corporations and Financial Services released the report from its inquiry into the Financial Services Regulatory Framework in Relation to Financial Abuse.
That report, entitled “Financial abuse: an insidious form of domestic violence”, made a total of 61 recommendations the government is currently considering. Included in them was a call out to financial advisers and an acknowledgement of how superannuation, and SMSFs specifically, can be used to inflict financial abuse on a partner.
“It’s a positive development that both sides of politics were focused on financial abuse during the election campaign. We’re hopeful this means that any measures rolled out in this term of government will have bipartisan support,”
Chartered Accountants Australia and New Zealand chief executive Ainslie van Onselen says.
“We look forward to working with the next government to implement changes in this important area because it’s clear a holistic approach is needed.”
What is financial abuse?
Acknowledging there were many definitions of financial abuse, the PJC noted: “Financial abuse generally refers to actions aimed at controlling access to money or finances, however, for the purposes of this report, the term financial abuse will include economic abuse, which more broadly refers to controlling economic resources (for example, employment, education, housing, transport and food) beyond money and
finances.”
The Australian Bureau of Statistics (ABS) classifies economic abuse into three broad categories: economic restriction behaviours, economic exploitation and economic sabotage behaviours.
Economic exploitation includes pressuring or forcing a partner to sign financial documents and manipulating or forcing them to cash in, sell or sign over any financial assets they own. Economic restriction includes controlling or trying to control them from knowing about, having access to, or making decisions about household money and their income or assets.
The most recent ABS Personal Safety Survey found 16 per cent, or 1.6 million women, had experienced partner economic abuse compared to 7.8 per cent, or 745,000, for men. Of those 1.6 million women, 173,900 have experienced economic abuse at the hands of a current partner, while 1.5 million have experienced economic abuse perpetrated by a former partner. For those who experienced economic abuse by a current partner, economic exploitation was the most common type, with 75 per cent reporting that was the case. And for situations where the abuse came from a former partner, economic sabotage, such as damaging or destroying property, was the most common type at 78 per cent.
The role of SMSFs
“Financial abuse is a complex and sector-wide issue that requires a holistic approach from various stakeholders,” van Onselen acknowledges.
“Like all other financial products
and services, SMSFs can be subject to financial abuse through either coercive or deceptive means.”
The “Financial abuse: an insidious form of domestic violence” report used a case study provided in a submission to highlight how SMSFs can be used to inflict financial abuse. In that example, a young single mother, who had considered herself financially savvy, was charmed by a new partner who convinced her over time she wasn’t good with money.
He began restricting how she spent money. He also told her he had extensive investment experience and convinced her to set up an SMSF. Although she believed the account was in her name and she controlled the investments, when she left the family home and tried to access the fund’s benefits, she realised her partner had transferred funds into an account only he could access.
SMSF Association head of policy and advocacy Tracey Scotchbrook points out abuse can happen at the point of establishment of an SMSF or sometime later and it can take a good period of time before the victim becomes aware of it as per the above example.
“It could be something that happens later, well after the fund has been established. The coercive control and the types of behaviours that have been exhibited by perpetrators often have a long tail. It’s something that builds over time as they erode the confidence of their partner and gradually take control away from them, so much so the victim doesn’t realise it’s happening until circumstances
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“Financial abuse is a complex and sector-wide issue that requires a holistic approach from various stakeholders. Like all other financial products and services, SMSFs can be subject to financial abuse through either coercive or deceptive means.” – Ainslie van Onselen, Chartered Accountants Australia and New Zealand .”
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change and they find they are corralled or stuck and don’t have access to certain bank accounts or have control of different aspects of their financial life,” Scotchbrook explains.
Institute of Financial Professionals
Australia head of technical services
Natasha Panagis notes most of the harm via SMSFs occurs in relationships when the person causing the harm has the position of power in the fund either as a trustee or the director of the corporate trustee.
“They use that role to do a couple of things, such as controlling the spouse or the family member’s retirement savings, or it could be by way of pressuring a partner or a relative to join an SMSF and subsequently make decisions that aren’t in the new member’s best interests. It could also take the form of shutting someone out of the decision-making process by withholding information from them, or changing fund structures. In some extreme cases it may even involve forging documents,” Panagis says.
There are other insidious ways an abuser can use an SMSF. For example, if a trustee refuses to agree to the wind-up of an SMSF, the only recourse left for the other trustees is to take them to court.
“SMSFs don’t have access to a body like AFCA (Australian Financial Complaints Authority) because they are a privately held vehicle. It means AFCA doesn’t have any ability to act as an arbitrator where
there’s a dispute between the trustees,” Scotchbrook states.
“So the only avenue available to aggrieved parties in any SMSF dispute, whether it’s a financial abuse situation or something else, is to take the matter to court if it can’t be resolved among themselves. That action, of course, is not accessible to someone who’s been cut off from their financial lifelines.”
This was an issue also recognised by PJC chair Labor Senator Deborah O’Neill, who said: “The Public Trustees of Australia pointed out that victims of financial abuse within self-managed superannuation funds face severe disadvantages, as these funds are not covered by the Australian Financial Complaints Authority ... Something is very wrong when the perpetrators of economic abuse receive their victim’s superannuation earnings.”
The recommendations
The committee was so concerned about the use of SMSFs in financial abuse that it has recommended a further review “into the intersection between financial abuse and the superannuation system, particularly in relation to SMSFs”.
It put on the record: “The committee is concerned that SMSFs represent a significant pool of funds that are vulnerable and attractive to would-be perpetrators of financial abuse. The committee notes that financial abuse perpetrated through SMSFs has the potential for devastating impacts on victim-survivors’ financial and retirement
prospects.”
Scotchbrook agrees a further review into the use of SMSFs is probably necessary and occurrences of financial abuse using these types of super funds need to be brought into the light.
“As we saw, the power of some of the lived experiences of the victim-survivors, or indeed where they’re unable to have a voice themselves through their families or other representatives, really highlighted some of the hidden issues in this space,” she points out.
“So I think it’s really important that, once again, those with the lived experience have an opportunity to have a voice and that those voices can help effect important positive change to protect victims of this abuse.”
Another recommendation highlighted the role of financial professionals in the space, including financial advisers, and proposed a review of their ethical obligations. It also proposed penalties “for members who actively enable or facilitate financial abuse on behalf of their clients where there is no other reasonable basis underlying the instructions given by the client”.
There was also a call for professional and victim-survivor advocate bodies to “co-design education resources for service providers to enable increased identification of financial abuse and timely reporting of suspected abuse to financial institutions and law enforcement bodies.”
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“We need sustained public campaigns and practical resources to help people understand that SMSFs are serious financial structures, not something to enter into lightly. – Natasha Panagis, Institute of Financial Professionals Australia
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What can the sector do?
Before they issue their own guidelines, most professional organisations that deal with SMSFs are waiting to see what the government does with regard to the many recommendations of the report and potentially the outcome of a second inquiry specifically into superannuation.
However, many are already having discussions with their members around how to identify financial abuse.
“Education is key. Chartered accountants are in a unique position to identify when financial abuse could be occurring, which is why we are stepping up our efforts and resources to educate our members on this important matter,” van Onselen reveals.
“If professionals who interact with our financial systems are alive to the issue and know what to look for, then that is an important step in the right direction.”
Like any recognised profession, advisers and accountants already have legal and ethical obligations, as well as fiduciary duties and professional standards to which they need to adhere.
“Ideally this should all be already part of what good practitioners are doing. So we just hope that this doesn’t become an extra layer of red tape as opposed to reinforcement of the professional responsibilities that they take seriously. We’ll certainly look to help members spot these types of things, but we might just wait to see how this pans out before we
go full steam ahead,” Panagis admits.
There is also an industry call for a complaints mechanism or channel a professional dealing with SMSF clients suspected of suffering from financial abuse could use.
“We’re looking to what other mechanisms could be put in place to assist victims in this situation to get some sort of action or redress simply and cost effectively, but, importantly, timely,” Scotchbrook reveals.
It is accepted education regarding financial abuse is very important, but particularly so in the SMSF context so more people can be aware of what it is and not fall victim to the abuse in the first place.
“We need sustained public campaigns and practical resources to help people understand that SMSFs are serious financial structures, not something to enter into lightly. These funds rely on trust, cooperation and independent decision-making, so people should always get proper advice before joining one,” Panagis suggests.
She also highlights the need for financial professionals in this space to continue to act as strong gatekeepers, which may mean gently asking new members about family dynamics or potential risks.
“They should make sure that their clients know they have rights, like the right to challenge decisions or leave a fund if things aren’t right, and, I think, more importantly, we can’t fall into the trap of
making assumptions about who’s at risk here,” she advises.
One of the many misconceptions people have is that financially savvy individuals do not fall victim to financial abuse, however, the inquiry heard many stories of highly educated professionals who were victims of this behaviour.
“There was one person who gave evidence to the inquiry who was a financial services executive. She had many, many years in the industry and were well educated, so was very knowledgeable of the system. But she herself had not recognised that, over time, her partner had been abusing her. It had started in a very, very small way,” Scotchbrook notes.
“That is a typical scenario where the abuse gradually increased over time until the day the victim realised she was actually trapped.”
To this end, her message is clear: that while the professional bodies wait for the government’s next steps, it is vitally important for anyone working with SMSFs to expel any preconceptions around who is or isn’t vulnerable.
“All practitioners need to ensure they’re really looking at what’s happening with their clients and make sure the relationships are strong. Any changes need to be carefully observed and a conscious effort to protect and act in the best interest of both members in an SMSF is vital, rather than just giving attention to the more dominant or controlling individual,” she points out.
“Any changes need to be carefully observed and a conscious effort to protect and act in the best interest of both members in an SMSF is vital, rather than just giving attention to the more dominant or controlling individual.”
– Tracey Scotchbrook, SMSF Association
An underrated asset class
SMSF portfolios are historically underweight in fixed income. Ali and Gaby Rosenberg acknowledge why this has been the case and put forward strong arguments for trustees to give more credence to the asset class.
When it comes to fixed-income allocations, SMSFs are trailing their institutional counterparts, raising questions about the missed opportunities for portfolio resilience and diversification.
Technology is opening new opportunities for SMSF trustees to invest in bonds to meet the growing demand for resilient income in an uncertain world. This enables the sector to overcome a persistent challenge in which many portfolios remain less diversified than institutional funds.
It should make sense for SMSFs to invest in fixedinterest assets in the same way as public offer super funds. After all, the end investors in both vehicles are essentially the same – average Australians looking to build sufficient income to fund a comfortable retirement.
But the difference between the defensive asset allocation of SMSFs and the nation’s largest funds is striking.
Take industry fund giant UniSuper. Its balanced option, which is also its MySuper offering, had a
24 per cent allocation to cash and fixed income as of March this year. This was just shy of its 28 per cent allocation to Australian shares. Its competitor, Australian Retirement Trust, offers a balanced option with a strategic asset allocation of 18.25 per cent to fixed income and cash.
By contrast, Australia’s 646,168 SMSFs held just $11.7 billion in direct debt securities at March 2025, according to the latest ATO figures. This is just a fraction of their total $970 billion in assets and compares to the $161.6 billion they held in cash and term deposits and the $265.7 billion they held in listed shares at the same date.
Many trustees are either parked in low-growth, low-yielding cash or concentrated in assets like equities, but they should acknowledge fixed income can also play a valuable role in income generation, downside protection and portfolio diversification.
The SMSF Association has long highlighted
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ALI ROSENBERG (pictured) and GABY ROSENBERG are co-founders of BlossomApp.
It should make sense for SMSFs to invest in fixed-interest assets in the same way as public offer super funds. After all, the end investors in both vehicles are essentially the same – average Australians looking to build sufficient income to fund a comfortable retirement.
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diversification issues the sector faces. As early as 2018 it reported 47 per cent of SMSFs held more than half their total assets in a single investment type, most often Australian shares or direct property. Recent industry commentary has highlighted the same theme, with diversification risk remaining a top issue flagged by both regulators and industry professionals.
Meanwhile, the “Class Benchmark Report” found over 80 per cent of new SMSFs are being set up by the generation X and millennial demographic groups. While this younger cohort of trustees are entering the system with long investment time horizons and a willingness to engage digitally, many are still building their knowledge of portfolio construction,
particularly in understanding the role fixed income can play as a defensive asset class.
In this environment, solutions that make high-quality fixed income more accessible are essential. Newer digital platforms are emerging to improve SMSF access to professionally managed fixed-income options that may offer more flexible entry points and simplified onboarding.
Solving the riddle
The question is: Why do SMSFs typically overlook fixed-income investments? Access and education are two of the main factors as noted below:
• Barriers to entry: Many retail platforms still do not offer the breadth of fixedincome products to retail investors that institutions enjoy.
• Perceived complexity: Bonds, credit spreads, duration and yield curves can all sound more like an economics class than a wealth plan to the average SMSF trustee.
• Knowledge gaps: Advisers and trustees who came of age in a time of equities-dominated portfolios and zero interest rates may lack confidence in their understanding of fixed income.
Some SMSF trustees who are able to overcome these challenges generally find an investment strategy encompassing fixed income may not only reduce their overall risk of capital loss, but can also enhance returns.
To this end, research by Class in 2023 showed SMSFs with balanced exposure across multiple asset classes, including a moderate allocation to cash and fixed interest, outperformed peers that were concentrated in single investment types. The study showed allocating 10 per cent to 20 per cent of their assets to cash and term deposits achieved higher median fund
performance than those with more extreme allocations.
Meanwhile, respected SMSF administrator Heffron has designed model portfolios recommending 15 per cent to 25 per cent of the typical SMSF fund with a balanced investment strategy should be held in Australian fixed interest.
Why it matters
There are several reasons investors should consider fixed income as part of a retirement-focused portfolio, in particular for its potential to manage risk and generate income.
While cash offers short-term liquidity, it lacks the long-term earning potential of other defensive asset classes. United States hedge fund manager Ray Dalio actually states “cash is the worst investment over time”. Equities, meanwhile, are volatile and there is no certainty the share market’s rapid rebound from its April 2025 lows will be sustained as the Trump-led US government rolls out more of its policy agenda.
Fixed income is often considered a middle ground between growth and capital protection, with the ability to offer income, stability and diversification. Once this thesis is accepted, the question becomes which fixed-income strategy is the right one for individual investors.
For those exploring managed funds, some studies have shown active fixedincome managers have outperformed passive benchmarks in certain periods. For instance, S&P Global’s SPIVA Scorecard, which measures the performance of actively managed funds relative to benchmarks over time, found 70 per cent of Australian bond
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INVESTING
Source: SPIVA Australia Year-End 2024 Scorecard, S&P Dow Jones Indices. This chart highlights that in 2024, active fixed-income funds in Australia delivered an asset-weighted average return of 3.9 per cent, outperforming the 2.9 per cent of the S&P/ASX Australian Fixed Interest 0+ Index.
funds outperformed their passive peers in 2024. Morningstar has also found active fixed-income managers have demonstrated relatively stronger performance consistency compared to some other asset classes.
Technology rules
It’s true traditional ways to invest in fixed
Factors trustees may consider:
1. It may be worth reviewing portfolio diversification and revisiting asset mix. Trustees should speak with a licensed adviser if they need assistance.
income, buying individual bonds or navigating wholesale platforms, can be complex, capital intensive and often restrictive with high minimums and long lock-up periods.
However, digital solutions are now available that reduce traditional fixed-income barriers, such as high minimums or complex onboarding. These platforms may suit trustees seeking simple access to managed
In this new era of volatility, investors are seeking better ways to construct resilient portfolios, ones that can generate attractive long-term returns while providing stability during periods of market or economic upheaval.
strategies, particularly if they want flexibility and a digital-first experience.
SMSF trustees are in a unique position. They have flexibility to tailor portfolios to their needs, time to plan for the long term and increasing access to investment opportunities once limited to institutions. But fixed income is clearly a missing piece in many of their investment strategies as reflected by sector data.
Fixed income has long played a key role in diversified portfolios. For SMSFs, reexamining how this asset class fits into their long-term strategy could support a more balanced approach to risk and income.
2. Consider different fixed-income strategies. This may include passively managed funds or those with active strategies aimed at responding to changing market conditions.
3. Embrace education. The SMSF ecosystem supports trustee education, with platforms regularly releasing information about
model portfolios and tools to help trustees get up the curve. Trustees should be encouraged to have a look at them.
4. Work with specialists. If fixed income still feels too technical, lean on specialists who understand the asset class. Experts can demystify the space and help structure a truly diversified strategy.
A multidimensional thematic
Climate change continues to be a popular theme among investors. Mike Harut encourages individuals to look beyond the obvious sectors to take advantage of the momentum this area is currently enjoying.
Policymakers, corporate leaders and investors are increasingly aligned in recognising climate change as a defining issue of our time. It’s not just policy support that is mobilising massive investments in clean technologies, it’s also corporate net-zero targets, and often simple economic realities, that are accelerating demand for climate change solutions. This makes a compelling investment opportunity in companies that provide these solutions.
But rather than focusing solely on high-profile opportunities, such as renewable energy or electric vehicles (EV), investors should also consider the enabling infrastructure and technologies that underpin the net-zero transition.
Outlined below are four hidden heroes that are enabling this transition to occur: energy efficiency
enablers, infrastructure supporting electrification, companies enabling a more circular economy and those involved in efficient computing and artificial intelligence (AI).
Of course, there have been and will continue to be many bumps along the way. But the long-term direction towards decarbonisation remains clear. Long-term investors, who position early and go beyond the obvious, will be well placed for the next phase of growth as the world accelerates toward a low-carbon future.
Energy efficiency: an effective emissions tool While the climate change mitigation spotlight often falls on renewable energy and EVs, part of
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MIKE HARUT is responsible investment manager at Munro Partners.
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the solution lies in less publicised, yet still important, areas such as energy efficiency and the technologies enabling it.
Businesses focused on optimising how energy is consumed, stored and managed are beginning to stand out as more attractive long-term opportunities.
There are also opportunities emerging with innovative firms working in software, automation, industrial hardware and advanced data analytics that offer highimpact, scalable solutions for reducing energy waste across sectors ranging from manufacturing and logistics to construction and real estate.
Today, energy efficiency is one of the most potent and proven strategies for reducing carbon emissions. Munro Partners and industry research from 2024 found that in the United States, for example, energy efficiency initiatives contributed more to emissions reduction between 2010 and 2022 than renewable energy deployments. Yet despite its effectiveness, investing in companies offering energy efficiency solutions receives less attention. Unlike energy production, efficiency solutions reduce demand altogether, cutting both costs and emissions in the process. As a result, energy efficiency solutions represent one of the most financially attractive areas of investment for heavy emitters.
At its core, energy efficiency is about achieving more with less, optimising energy usage without compromising productivity or performance. Solutions in this space include industrial automation systems, state-of-the-art insulation, smart heating and cooling systems, and software tools that provide real-time visibility and control over energy use.
Governments and corporations aiming to meet decarbonisation targets are
increasingly adopting energy efficiency technologies because they offer one of the most cost-effective pathways to emissions reduction. Many of these solutions come with short payback periods and can be rapidly deployed across different industries and geographies.
For example, Irish building insulation company Kingspan says the insulated systems it sold in 2024 will help avoid the equivalent of 172 million tonnes of carbon dioxide over their lifetime. This is the equivalent of around 40 per cent of Australia’s annual emissions, based on the latest data to June 2024.
Electrical infrastructure: supporting the transition
As renewable energy becomes a larger share of the energy mix, the supporting infrastructure must evolve in line with it. The existing power grid must be re-engineered to accommodate the variable output of solar and wind, the rise of decentralised generation and the broad electrification of transportation and heating.
This transformation requires substantial upgrades across a range of technologies, including energy storage solutions, smart grid software platforms, transformers, and modern transmission and distribution lines. While these components may not capture the public imagination like solar farms or EVs, they are essential to supporting the move away from things like transport and heating being reliant on fossil fuels.
In addition to renewables, nuclear power is receiving renewed attention as part of the transition. As a low-carbon baseload energy source, nuclear is increasingly viewed as a necessary complement to intermittent renewables. Some of the world’s largest technology companies are now signing long-term agreements with nuclear providers to
Rather than focusing solely on high-profile opportunities, such as renewable energy or electric vehicles (EV), investors should also consider the enabling infrastructure and technologies that underpin the net-zero transition.
meet the surging electricity demands of data processing, AI training and cloud computing, while at the same time helping them towards their ambitious climate change targets.
The companies building and operating these critical infrastructure components, whether through energy storage, grid optimisation or power distribution, play a central role in enabling the net-zero future. Innovations, such as long-duration batteries, high-voltage direct current lines and microgrids, demonstrate the progress being made in making energy systems more intelligent and adaptable.
Circular economy: reducing waste and reusing materials
Reducing waste is also becoming a focus for investors.
The concept of a circular economy is revolutionising how industries manage resources. Rather than relying on extractive, linear models of production
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and consumption, the circular approach focuses on reducing waste, increasing recycling and creating more sustainable manufacturing systems.
Plastics, industrial waste and water scarcity present some of the biggest environmental challenges today. Companies involved in waste management, advanced recycling and water treatment solutions are experiencing rising demand, particularly as corporate and government policies promote higher sustainability standards in packaging and industrial processes.
Simultaneously, regulatory frameworks are encouraging companies to adopt more sustainable practices, particularly in areas such as plastic waste reduction, landfill diversion and responsible industrial waste incineration.
Innovation in sustainable materials is progressing rapidly. Emerging products, such as low-carbon cement, bio-based plastics and synthetic fuels, hold the potential to decarbonise some of the most emissions-intensive industries, including construction, chemicals and aviation.
AI and energy: a challenge and a solution
The rapid adoption of AI is reshaping global energy consumption. AI workloads are significantly more power-intensive than traditional computing, and as businesses deploy AI at scale, data centre electricity demand is set to surge.
Research in 2024 from the Boston Consulting Group found in 2022, before the lift-off in AI-related data centre infrastructure spending, it was estimated 2.5 per cent of US electricity consumption was for data centres. The same research
also estimates that proportion could triple by the end of the decade.
But rather than slowing decarbonisation efforts, AI could increase the urgency of the energy transition, forcing companies to scale clean energy investment and grid infrastructure faster than previously expected. This is exactly what we have seen with companies like Microsoft and Amazon not only remaining among the biggest corporate participants in renewable power purchase agreements, but also both signing innovative deals on nuclear energy.
This creates what is known as the ‘AI paradox’: AI technologies have the potential to drive higher energy consumption, yet they also offer powerful tools to manage and reduce that consumption. Indeed, AI is playing a role in energy efficiency and grid optimisation. Machine learning models are being used to improve electricity demand forecasting, enhance battery storage performance and increase the efficiency of industrial and building energy systems.
While AI is accelerating the need for clean power, it is also pushing companies to use power more efficiently.
Companies that are developing energyefficient AI chips, data centre cooling technologies and intelligent infrastructure stand to benefit from rising demand, effectively to ensure the potential tripling of energy use by these technologies does not occur. These firms operate at the confluence of two powerful trends, being digital transformation and climate transition, and are poised to play a pivotal role in shaping a more sustainable technological future.
As AI becomes embedded across industries, innovation in energyefficient computing infrastructure will
Long-term investors, who position early and go beyond the obvious, will be well placed for the next phase of growth as the world accelerates toward a low-carbon future.
be crucial. This includes everything from semiconductor design and edge computing to renewable-powered data centres and smarter workload distribution models.
Climate change as a structural investment theme
At Munro Partners, we view climate change mitigation not just as an environmental challenge, but as a fundamental structural shift that will shape global markets for decades. Our climate area of interest focuses on identifying and investing in companies that are enabling others to reduce their emissions. These include firms delivering energy efficiency, circular economy integration and electrical infrastructure.
We believe that by looking beyond the obvious to these hidden heroes of decarbonisation, investors will find enabling technologies both vital to meeting global climate targets and compelling long-term investment opportunities.
Become an Accredited SMSF Specialist
Become an Accredited SMSF Association Specialist and be independently recognised for your SMSF expertise and knowledge
The industry benchmark, attaining an SMSF Association designation will set you apart and position you as an industry leader
The Association offers two different accreditation programs with flexible pathways for completion:
To register for an SMSF Association accreditation program, you are required to be a current Associate Member
The proposed introduction of the Division 296 tax has given management of the total super balance of a member increased significance. But Mark Ellem notes the new impost is not the only reason to prioritise this practice.
The federal government is proposing to introduce an additional 15 per cent tax on individuals with a total superannuation balance (TSB) exceeding $3 million. This proposal brings the importance of accurately understanding, calculating and reporting the TSB sharply into focus for members and advisers alike, not only for compliance, but also for strategic superannuation planning.
Do not disregard this article if you have no SMSF clients with a TSB exceeding $3 million. As outlined below, the TSB is relevant to a broad range of strategies and applies to all superannuation members regardless of balance size.
What is the TSB and how is it calculated?
The TSB is defined in section 307.230 of the Income Tax Assessment Act 1997. It is a measure of an individual’s total interests in the superannuation
system as at a point in time, generally 30 June each income year.
Broadly, at the end of an income year, an individual’s TSB is comprised of:
• the accumulation-phase value of all superannuation interests. Generally, this reflects the total ‘withdrawal benefit’ a member would receive if they cashed out their super at that moment (unless a different valuation method is prescribed in regulations),
• the value of retirement-phase accounts or pension balances. For members of an SMSF with an account-based pension (ABP), a retirement-phase transition-to-retirement income stream (TRIS) or a market-linked pension (MLP), these will also reflect the withdrawal benefit the member would
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MARK ELLEM is head of SMSF education at Accurium.
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receive if they cashed out their super at that moment. Special rules apply for legacy defined benefit pensions,
• rollover benefits not yet allocated to a fund,
• but not any structured settlement contributions.
The TSB aggregates amounts across all superannuation funds and is calculated as at 30 June based on each fund’s annual reporting. Importantly, the TSB is determined using information funds report to the ATO and members have little direct control over the calculation.
Example 1: calculating TSB across multiple funds
Sarah holds $2.1 million in her SMSF and $1.2 million in an Australian Prudential Regulation Authority-regulated fund at 30 June 2025. Her TSB for the 2025 income year is $3.3 million, exceeding the proposed large superannuation balance threshold.
Why is the TSB Important?
The TSB operates as a gatekeeper for various superannuation measures, such as a member’s:
• eligibility to make non-concessional contributions (NCC) – individuals with a TSB of $1.9 million or more at 30 June are unable to make further NCCs in the following year (increasing to $2 million for the 2026 income year),
• access to the bring-forward NCC rule –the permitted amount is reduced as the TSB increases,
• entitlement to the government cocontribution and spouse tax offset,
• eligibility to carry forward unused portions of their concessional contributions cap,
• eligibility to use the work test exemption, and
• the ability to use segregation for exempt current pension income (ECPI).
With the upcoming $3 million threshold for the proposed Division 296 tax, the TSB is even more significant. Members approaching this threshold must carefully monitor reported values and consider tax planning, including asset realisation and withdrawal strategies.
How SMSFs report the TSB Market value reporting
Superannuation Industry (Supervision) (SIS) Regulation 8.02B requires SMSF trustees to disclose fund assets at market value as at 30 June of each income year in the annual financial statements. This means member balances will be based on the reported market value of fund assets. Further, as the SMSF administrative platforms will populate the SMSF annual return (SAR), these values are taken directly from the audited financial statements and reflect the theoretical amount that could be realised if assets were sold on that date.
Market value versus realisable value
This is a crucial distinction because the reported market value ignores tax that would become payable if appreciated assets (such as property or shares) were sold for their reported 30 June market value. Thus, the contingent capital gains tax (CGT) liability on unrealised gains is generally not taken into consideration when reporting for TSB purposes.
Example 2: market value can overstate withdrawal value
John’s SMSF has a single property:
• cost base: $1.5 million
• market value at 30 June: $2.5 million.
If John’s SMSF sold the property, the $1
million unrealised gain would trigger CGT. Nevertheless, his TSB and reported balance would show $2.5 million and not the posttax amount that would be available after sale and available for John to withdraw.
Is the reported figure really TSB?
The legislative definition of the TSB for both accumulation and retirement-phase value refers to the amount the member would have received if they “voluntarily caused the superannuation interest to cease at that time”, that is, for both accumulation and retirement phase, the sum a member would receive if they voluntarily ended their interest at that time. In practice, however, the figure reported is often market value and not a post-tax, realisable withdrawal amount.
ATO SAR instructions state in respect of completing sections F and G in the member information section: “We will use the amount you enter at labels S1, S2, X1 and X2 to calculate the total superannuation balance for each of the members.”
Therefore, the TSB used for all measures, including new taxes, may overstate the true net value, especially where substantial unrealised gains exist and the potential CGT is not taken into consideration.
In relation to label X1, which the ATO will use if completed to determine the accumulation-phase value of an individual’s TSB, the instructions state: “The accumulation-phase value is the total amount of the superannuation benefits that would become payable if the member voluntarily caused the interest to cease. The accumulation-phase value is often less than the value at label S1 accumulation-phase account balance as the costs to cease the interest are subtracted from the account balance.”
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Where the accumulation-phase value is less than the member account balance, you can complete label X1 and the ATO will use this lower figure to calculate the TSB.
Should SMSFs adopt tax-effect accounting?
Some in the profession argue for adopting tax-effect accounting in SMSFs, that is, accounting for deferred tax on unrealised gains when calculating member balances. This is my position as it better aligns the reported value with the legislative concept of withdrawal benefit and provides the member with a more accurate value of their superannuation benefits. Dealing with entitlements in disputes such as divorce provides an additional compelling argument for the adoption of tax-effect accounting in an SMSF, but that’s a discussion for another time.
Example 3: tax-effect accounting in practice
Revisiting John’s scenario, let’s say the property’s unrealised gain is taxed at an effective rate of 10 per cent (owned for more than 12 months):
• unrealised gain: $1 million
• estimated tax: $100,000.
Using tax-effect accounting, John’s balance would be $2.4 million (market value less the tax provision) – a figure more representative of his withdrawal benefit. Of course, where the fund did not adopt tax-effect accounting, the lower withdrawal figure could be reported at label X1 in the SAR. But why wouldn’t we let the SMSF administration platform do the calculations, whereby the same figure would be automatically populated at label S1? I acknowledge the calculation of
potential CGT is easy for John’s scenario, but SMSFs usually have more than just one asset subject to movement in market value, making a manual calculation significantly more time consuming and prone to human error.
Are there tax-effect accounting risks?
The potential for SMSFs to implement taxeffect accounting when preparing annual financial statements, particularly for the first time, raises legitimate questions about both compliance and the perception of intent under the proposed Division 296 tax regime. Some may be concerned the ATO could interpret a sudden change in approach as a scheme to reduce Division 296 tax exposure or to enable eligibility for contribution caps or concessions that might otherwise be unavailable.
In my view, wholesale adoption of tax-effect accounting on a firm-wide basis, rather than selectively for particular funds or scenarios, is important in demonstrating both integrity and a lack of tax-driven motive. Consistency across a practice evidences a methodological decision rather than an opportunistic measure and aligns with accepted accounting standards, notwithstanding an SMSF is not a reporting entity and is not required to follow such standards.
It is difficult, in my view, to credibly argue that tax-effect accounting, implemented in accordance with stated fund accounting policies, disclosed in the annual financial statements, and on a whole-of-firm basis, would constitute tax avoidance. Rather, the approach seeks to present a more realistic withdrawal benefit, which underpins the legislative definition of the TSB. Properly executed tax-effect accounting reflects the post-tax value a member could withdraw rather than an artificial reduction for tax
With the upcoming $3 million threshold for the proposed Division 296 tax, the TSB is even more significant. Members approaching this threshold must carefully monitor reported values and consider tax planning, including asset realisation and withdrawal strategies.
benefit purposes.
Accordingly, if the underlying rationale for adoption is to align member balances to the legislative intent and definitions underpinning the TSB, as opposed to a reactive response to new tax measures, the ATO would be unlikely to view this as a scheme for avoidance. Open disclosure in financial statement policies and application across all relevant funds further supports the bona fides of this approach. Ultimately, adoption of accounting standards and transparent, consistent firm-wide practice provides professional and regulatory defensibility for adopting tax-effect
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accounting in SMSFs for the first time.
TSB and non-complying super funds
A further point of complexity arises for members who hold interests in noncomplying SMSFs or other non-complying superannuation funds. The Division 296 tax rules, as confirmed by the explanatory memorandum to the bill, set out two important aspects:
1. Inclusion of non-complying super interests in TSB
For the purposes of determining whether an individual’s TSB exceeds the $3 million threshold, all interests in Australian superannuation funds, including non-complying SMSFs, are counted. This means members with balances in both complying and noncomplying SMSFs must aggregate all these amounts (other than interests in foreign funds) to determine if they are potentially subject to Division 296 tax.
2. Exclusion of non-complying fund earnings from Division 296 tax
Although balances in non-complying SMSFs (or other non-complying funds) are included in the TSB, any earnings related to these interests are excluded from taxable superannuation earnings for Division 296 tax purposes. This recognises that non-complying funds are already taxed on earnings at the highest marginal rate and do not benefit from concessional tax treatment.
Dual treatment Division 296 tax impact
So let’s see how the different treatment of non-complying super fund balances affect member assessment relating to the newly
proposed measure.
Example 4: Division 296 tax with noncomplying fund interest
On 30 June 2025, Phil has a TSB of $4.3 million:
• $1.2 million in a non-complying SMSF
• $3.1 million in a complying super fund. On 30 June 2026, he has a TSB of $4.4 million:
• $1.1 million in the non-complying SMSF
• $3.3 million in the complying fund. There were no contributions or withdrawals during the year.
• Phil’s basic superannuation earnings is $4.4 million – $4.3 million = $100,000.
• His superannuation earnings disregarding the excluded non-complying interest is $3.3 million – $3.1 million = $200,000.
The lesser of these, the $100,000, is used for Division 296 tax.
• Phil’s TSB above $3 million: $1.4 million.
• Percentage above threshold: $1.4 million/$4.4 million = 31.82 per cent.
For SMSF advisers and trustees, it is vital to be aware of the compounding impact of non-complying fund interests on a client’s overall TSB and potential Division 296 tax exposure even when those earnings are not taxed themselves. Individuals may be liable for Division 296 tax based on complying fund earnings solely due to having their TSB pushed over the threshold by noncomplying interests.
Conclusion
The TSB is fundamental to both the strategic and compliance landscape for SMSF members and advisers, with its significance heightened by the introduction of the $3
The TSB is fundamental to both the strategic and compliance landscape for SMSF members and advisers, with its significance heightened by the introduction of the $3 million threshold for the proposed Division 296 tax.
million threshold for the proposed Division 296 tax. Accurate and consistent calculation of the TSB is essential, particularly as SMSFs are required to report member balances determined by the market value of fund assets. This can create a mismatch between reported balances and the actual amounts members can access, especially where there are substantial unrealised gains. Further, interests in a non-complying fund can increase a member’s TSB while their earnings remain excluded from Division 296 assessments.
In this evolving environment, it is crucial for SMSF practitioners and trustees to carefully review their own processes for determining and disclosing members’ TSB. Clear communication of these calculation methods and any assumptions made will help ensure all parties understand the true implications for contributions, tax and benefit access, supporting robust and compliant decision-making for SMSF members.
New standards to note
There are numerous issues for trustees to face now when they do not satisfy the minimum pension payment obligations. Craig Day details the serious ramifications resulting from a compliance breach of this nature.
Since 2013 and the ATO’s release of Taxation Ruling (TR) 2013/5 on when account-based pensions (ABP) start and stop, the industry has been well aware of the tax implications of a super fund failing the pension standards. However, in a recent update of that ruling, the ATO clarified several issues, which could have much broader impacts and change the way funds that have failed the standards need to be administered.
Recap on failing pension standards
Where a fund paying an ABP fails the pension standards in the Superannuation Industry (Supervision) Regulations, most commonly by failing to pay the required annual minimum amount or by not complying with the ABP commutation rules, the pension will be taken to have stopped for tax purposes at the start of the relevant income year.
This means the fund will be ineligible to treat any income derived from the assets used to support the pension as exempt current pension income (ECPI).
Note, in some limited circumstances, the ATO may allow an ABP that failed to pay the minimum to continue. For the purposes of this article, it is assumed those concessions do not apply. For more information, please see ‘Exceptions to minimum pension payment requirements’ on the ATO website.
In addition, since 1 July 2017, failing the pension standards will also require the fund to report a transfer balance account (TBA) debit for the member. However, the timing and value of the debit will instead be based on when it is possible to determine the fund failed the standards.
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CRAIG DAY is head of technical services at Colonial First State.
The
updated TR clarified that once an ABP has ceased for tax purposes, it cannot recommence satisfying the pension standards in a future year, regardless of whether the fund treated the ABP as continuing for super purposes or complied with the pension standards in that subsequent year.
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For example, where an SMSF failed to pay the minimum pension amount in a year, the ABP would be treated as having stopped for tax purposes at the start of that year. However, the trustee would not be required to report a TBA debit until after the end of the year, that is, by the following 28 July 2025, as it wouldn’t be possible for them to know the fund would fail the standards until immediately after the end of 30 June. In this case, the value of the debit would then be based on the value of the member’s ABP account at the end of 30 June.
How funds fixed the problem
Previously, where a fund failed the pension
standards, the commonly accepted industry practice to fix the problem was to treat the relevant ABP as having stopped for tax purposes, but not for superannuation purposes. This was on the basis the trustee still had an ongoing contractual obligation to pay an income stream to the member. In this case, the trustees would then treat the ABP as having restarted for tax purposes on 1 July at the start of the following financial year. This had the following advantages:
• the income from the assets used to support the pension would only lose its ECPI status for a maximum of 12 months, and
• the TBA credit for the new pension would be reported as commencing on 1 July, limiting any TBA debit and credit potential mismatch. However, the recent update to TR 2013/5 will require trustees and administrators to rethink how they deal with these situations.
So what changed in the updated ruling?
When the ATO re-released TR 2013/5 in late June 2024, it included additional wording not present in an earlier consultation draft that questioned the validity of the industry’s method of addressing this issue. Specifically, the updated TR clarified that once an ABP has ceased for tax purposes, it cannot recommence satisfying the pension standards in a future year, regardless of whether the fund treated the ABP as continuing for super purposes or complied with the pension standards in that subsequent year. Instead, the member will need to fully commute their existing income stream entitlement, which has already ceased for tax purposes, and commence a new ABP that satisfies the pension standards.
Due to this, the industry’s previous approach will no longer comply with the ATO’s requirements and affected members will need to fully commute to recommence a new ABP as soon as they become aware their pension fails the standards. However, depending on the situation, this may not happen until many months after the end of the year, in turn extending the period the fund will be ineligible to treat the income from the assets used to support the pension as ECPI. Additionally, this will require the member and the fund to expend time and resources to start a new ABP in the fund part way through the year. This process may require the trustees to revalue the fund’s assets and prepare an interim set of accounts to accurately calculate and document the new pension details and TBA credit.
What else did the ruling say?
The ATO also clarified several other matters in the ruling, which, when combined with other ATO positions, could create additional complexities for funds, as well as members and their beneficiaries. These issues are outlined as follows.
Merger of member benefits
In the ruling, the ATO restated the tax rule that where a superannuation income stream is payable, the amount supporting that income stream is always to be treated as a separate interest. However, it then went on to confirm a superannuation income stream will cease to be payable once it is taken to have stopped for tax purposes. This is important as it means, where an ABP fails the pension standards in a year, the interest that supported the income stream in question can no longer
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COMPLIANCE
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be treated as a separate interest from the start of the year and will merge with any other accumulation interests the member held in the fund at that time. This will then impact how the tax components of any benefits taken from that accumulation interest will be calculated.
For example, if an SMSF member had two ABPs of equal value, one consisting of a 100 per cent taxable component and the other a 100 per cent tax-free component, both would merge into a single accumulation interest if they both failed the pension standards in the same year. Where the member then immediately took a benefit from that merged interest, the tax components would be calculated as 50 per cent tax-free and 50 per cent taxable.
While this would generally have no tax impact for members aged 60 or over, as any benefit they take from this interest would be tax-free regardless of the tax components, it could effectively significantly increase the death benefits tax payable by any non-dependent beneficiaries as it will no longer be possible to direct death benefit payments to them from the ABP wholly made up of a tax-free component, effectively undoing any complex and expensive estate planning advice the member may have received.
Pension payments treated as lump sums
In the updated TR, the ATO also confirmed any pension payments paid from an ABP in the same year that it ceased due to failing the pension standards must instead be treated as superannuation lump sum benefit payments. Unfortunately, this
then creates significant administrative complexity for the fund, as well as resulting in potential compliance issues where the fund was paying a transition-to-retirement income stream (TRIS).
For example, the requirement to treat each pension payment as a lump sum could prove to be an expensive and complex headache for funds as the trustee will now need to calculate and record the tax components of each individual payment based on the tax components of the member’s underlying merged accumulation interest on the date they were paid. To do this, the trustees will need to revalue the fund’s assets and prepare an interim set of accounts for each individual payment instead of just applying the tax component proportions of the ABP that were set at commencement.
In addition, this could cause compliance and tax issues for a member/ trustee where the pension that failed the standards was a TRIS. For example, where the member had yet to satisfy a condition of release, which would have converted their benefits to an unrestricted nonpreserved component, the requirement to treat the payments as lump sums would result in the trustees breaching the preservation standards, in turn triggering potential trustee penalties. Further, the member would be required to include their previously exempt pension payments in their assessable income as required for benefits paid in breach of the preservation rules.
Additional transfer balance cap implications
As previously outlined, where an ABP stops due to failing the pension standards, it will trigger a debit in the member’s TBA. The timing of this debit is prescribed in the
The industry’s previous approach will no longer comply with the ATO’s requirements and affected members will need to fully commute to recommence a new ABP as soon as they become aware their pension fails the standards.
law and does not align with the ATO’s view on when the ABP is taken to have stopped for tax purposes.
This is because it will generally not be possible to know at the start of the year the ABP will fail the pension standards at some later time during that year. As a result, the transfer balance cap (TBC) rules state, for the purpose of determining the timing and value of this TBA debit, a fund is required to assume a superannuation income stream continued to satisfy the pension standards up until the time it is possible to determine it failed those standards.
For example, for an ABP that failed to pay the minimum in a year, this would
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be from the end of 30 June in that year. Importantly, this means that even though the pension will be taken to have stopped at the start of the year for other tax purposes, for TBC purposes it will only be taken to have stopped from the end of the year. As such, the TBA debit for failing to pay the pension minimum will then arise on 30 June and the value of the debit will be the value of the ABP as if it continued to satisfy the definition of a retirement-phase income stream up until that time.
Importantly, to calculate the debit, this means a fund, under a strict interpretation of the law, may need to complete two separate sets of accounts. One normal set for the fund’s annual return that assumes the ABP stopped at the start of the year for income tax purposes, and another set for TBC purposes that assumes the ABP continued to satisfy the definition of a tax-free retirement-phase income stream up until the end of the year. That is, under this interpretation, the value of the debit would be calculated as if the income from the assets used to support the pension continued to be exempt up until the end of the year.
It is also important to note, under the TBC rules, any TBA events occurring prior to an ABP failing the pension standards, such as a debit for a partial commutation, will continue to be valid as they occurred prior to the time the ABP did not satisfy the payment obligations. Conversely, the value of any pension payments that are required to be treated as a lump sum due to a pension failing the standards should not be reported as a TBC debit as they did not result from the member commuting their pension.
Finally, depending on the timing and
commencement value of the new ABP, this could result in there being a significant mismatch between the TBA credit and debit values, which could then impact the amount of assets the member could use to start a new pension.
Implications for death benefit income streams
Where an income stream failing the minimum payment standards is a death benefit pension, such as one that reverted to a person because of the death of their spouse, a range of additional issues will need to be considered.
Failing the death benefit cashing rules
As previously discussed, where an ABP fails the payment standards it will be taken to have ceased at the start of the year. For a death benefit pension this results in the fund breaching the associated cashing rules from that time as the death benefit will no longer be cashed as a continuing superannuation pension that is in the retirement phase.
In this situation, the ATO has previously confirmed trustees will need to act swiftly to address the breach and that this could be done by:
• arranging for the interest that supported the death benefit pension to be cashed in the form of a new ABP, or
• cashing the interest that supported the death benefit pension in the form of a death benefit lump sum.
Where a trustee takes action to address the breach as soon as possible after becoming aware of the issue, the regulator has confirmed it is likely to be satisfied the fund is now complying with the death benefit cashing rules on a forward-going basis even though it cannot remedy the original breach. However, where a trustee
fails to take prompt action to resolve the breach, significant compliance penalties could apply.
Death benefit interests must not be merged with the member’s own interests
As previously discussed, a member’s ABP will cease to be a separate interest and will merge with their other accumulation interests from the start of the year where it fails the pension standards. However, an important exception to this rule is where the ABP that failed the standards is a death benefit pension. In this case, the interest supporting the relevant pension must not be merged with the member’s own accumulation interests in the fund due to the requirement that a death benefit must continue to be treated as a superannuation interest of the deceased member and not the beneficiary.
As a result, an SMSF member could potentially end up with two separate accumulation interests in their fund in the same year where they were receiving two ABPs that failed the standards because one of them was a death benefit pension. In this situation, any pension payments from the member’s death benefit ABP prior to it failing the standards should be treated as death benefit lump sums. However, they should not be reported as a TBC debit as they did not result from the member commuting their income stream.
Conclusion
Given the significant tax consequences and administrative complexity associated with a fund failing the pensions standards, it’s now more important than ever for SMSF clients to understand the critical nature of complying with the pension standards at all times.
Trustee structural issues
Individuals must choose between employing a corporate or individual trustee structure when running an SMSF. Tim Miller outlines the implications of each course of action.
SMSFs occupy a unique space in Australia’s retirement savings landscape, offering individuals maximum control over their retirement assets. At the heart of every SMSF lies the crucial role of the trustee. Trusteeship in SMSFs is a privilege, but it comes with legal responsibilities. This article explores the definition, structure, obligations and life-cycle transitions of SMSF trusteeship.
What is an SMSF trustee?
A trustee is a person or company legally responsible for the management of the SMSF and its compliance with superannuation and taxation laws. Under normal circumstances all members of an SMSF must be trustees or directors of the corporate trustee. This ensures that those who benefit from the fund are the same individuals who make its decisions, a key aspect of being truly selfmanaged. However, not all circumstances are normal, but this point will be examined in greater detail below.
Section 17A of the Superannuation Industry (Supervision) (SIS) Act outlines the rules with which an SMSF must comply, including that:
• it has a maximum of six members,
• all members must be trustees or directors of a corporate trustee,
• no member can be an employee of another member, unless they are relatives, and
• trustees cannot be remunerated for their duties, except in limited, regulated circumstances under section17B of the SIS Act
According to the most recent ATO statistics as at 30
June 2024, 70 per cent of all SMSFs have a corporate trustee and up to 88 per cent of new fund registrations are choosing to adopt a corporate trustee over an individual trustee structure. This, of course, is one of the most important decisions both when setting up an SMSF but also in the context of maintaining the fund. It’s also a decision that will often be impacted by how many members the SMSF will service.
Single-member funds
When it comes to SMSFs, the trustee rules and requirements are the same for all funds with between two and six members. Where the rules differ is with regard to a single-member fund. These funds create a unique situation where the member must still be the trustee or a director of the corporate trustee, but is also bound by other legislative impositions and requirements.
If a single-member SMSF has individual trustees, then it must have a second individual trustee in addition to the member and this person cannot be the employer of the member unless they are related.
If a single-member fund has a corporate trustee, then the member can be the sole director of that company or the company can have one other director as long as the second director is not the employer of the member.
Individual v corporate trustees
Given an SMSF can choose between two types of trustee
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TIM MILLER is education and technical manager at Smarter SMSF.
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structures, why would you choose one over the other?
The decision between one or the other is clearly a personal choice, but there are factors favouring a corporate trustee structure.
Individual trustees
When considering individual trustees, the choice is often summarised as cost versus administrative ease. It’s true there are fewer upfront costs to set up an SMSF with individual trustees and the structure will result in annual cost savings as well, albeit a special purpose company has a negligible annual fee. However, these costs can often pale into insignificance when contemplated against the time and possibly financial cost of removing and adding various individuals as membership changes over the course of a fund’s lifetime.
As highlighted below, there are numerous requirements a trustee must adhere to for regulatory purposes and one of those is to keep super fund assets separate from personal assets. Where individual trustees are listed on asset titles that don’t provide for the inclusion of the trust name, the situation can create problems insofar as having to constantly provide supporting evidence to fund auditors.
So some of the key issues for individual trustees are:
• minimum of two trustees,
• all members must also be trustees,
• cheaper as there are no company set-up costs,
• common for family-run funds, and
• greater administration requirements when members are added or depart.
Corporate trustees
When considering a corporate trustee, consistency springs to mind. To this end, a corporate structure enables the one trustee to be maintained throughout the lifetime of the fund. The only requirement is to remove and appoint directors to match the membership of the day.
It’s also more flexible for single-member funds, providing for the opportunity for sole
directors, but also when one member dies in a two-member fund, the trusteeship can remain intact through the death benefit payment period and beyond.
So some of the key issues for a company acting as the trustee are:
• provides for single-member sole directors,
• all members are directors of the company,
• preferred for estate planning and limited liability, and
• more robust for long-term succession and compliance.
Penalty regime
One other relevant fact is that under the SMSF administrative penalty regime, the ATO can impose penalties on trustees for breaches of certain SIS provisions. Where a fund has individual trustees, the penalties will be imposed upon each trustee, which at the very least will translate into double the penalty rate. For corporate trustees there is just the one penalty to be met. For most trustees though the penalty regime should be the least significant consideration as compliance will ensure avoidance.
Legal responsibilities of trustees
As alluded to above, trustees are bound by certain regulatory requirements, referred to as covenants, which are outlined in section 52B of the SIS Act. These include duties to:
• act honestly in all matters concerning the fund,
• exercise care, skill and diligence,
• act in the best financial interests of beneficiaries,
• keep fund assets separate from personal assets,
• formulate and regularly review an investment strategy,
• manage reserves prudently (if applicable), and
• provide members with access to prescribed information. These covenants are automatically included in every SMSF trust deed, even if not explicitly stated. It is important to note some of these covenants are directly linked to the operating standards of the fund as provided for by the SIS
Being a trustee of an SMSF is not simply an administrative role; it is a legally enforceable fiduciary obligation. The decisions trustees make have longlasting impacts on the retirement outcomes of fund members.
Regulations, which means the trustees can be penalised for not following them, specifically the need to separate personal and fund assets and the need to formulate and regularly review the fund’s investment strategy.
New trustees must sign an ATO trustee declaration within 21 days of appointment and retain it for at least 10 years, but in reality it’s a document that should be maintained for the term of their trusteeship. Failure to do so may attract administrative penalties.
Disqualification and restrictions
A person cannot be a trustee or director of a corporate trustee if they are a disqualified person. This includes individuals who:
• have been convicted of a dishonesty offence,
• are undischarged bankrupts or insolvent,
• have been disqualified by the ATO or a court, and
• are subject to civil penalty orders.
If a trustee becomes disqualified, they must be removed immediately from both membership and trustee/director roles. This also applies to companies if a disqualified person is a responsible officer.
Alternative trustees
There are several events that can either result in an alternative trustee being appointed or trigger a change in SMSF trusteeship. These
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include:
• death of a member,
• members being under a legal disability, and
• other events such as member relocation overseas.
Trusteeship must be managed carefully to ensure the SMSF continues to meet the definition under section 17A of the SIS Act Documentation, timing and regulatory reporting all play critical roles in these events.
1. Death of a member
Upon a member’s death, the legal personal representative (LPR) may temporarily act as trustee while the death benefit is paid. This is permitted under section 17A(3)(a) of the SIS Act. It should be noted the legislation is permissive, not mandatory, and as such the trust deed will need to be consulted to determine how the death of a member is to be handled.
As the appointment of the LPR is restricted until the death benefit commences to be paid, such matters as the reversionary nature of a pension will determine whether the LPR can be appointed in the first place.
A fund has six months following the removal of a trustee to rectify the situation and retain its SMSF status.
2. Incapacity and enduring power of attorney
Under section 17A(3)(b) and (c) of the SIS Act, a person’s LPR, including someone holding an enduring power of attorney (EPOA) for a member, can replace that member as trustee or director. This allows the fund to retain its SMSF status even when the member is legally incapacitated. If that legal incapacity is due to age, that is, the individual is under 18, the member’s parent can act in their place.
3. Moving overseas
If all or most members move overseas, the fund risks failing the Australian superannuation fund definition, which is critical as an SMSF must remain a complying fund. In such cases,
If a trustee becomes disqualified, they must be removed immediately from both membership and trustee/director roles. This also applies to companies if a disqualified person is a responsible officer.
appointing a resident EPOA as trustee or director can be used to preserve residency status and comply with central management and control rules.
Key rules require that:
• the EPOA must be valid and enduring under state law,
• the member must resign as trustee or director if they have previously been a trustee and are able to legally resign,
• the EPOA holder is appointed in their own right and not as an agent, and
• alternative director arrangements are possible but must follow specific requirements.
Appointments and removals
When a new member joins or an existing member departs, the trustee structure must be adjusted accordingly. If a new trustee or director of a corporate trustee is appointed, it means:
• they must consent in writing,
• they must sign an ATO trustee declaration,
• they must not be disqualified persons, and
• directors of corporate trustees must have a director ID prior to appointment.
These events must be reported to the:
• Australian Securities and Investments Commission (ASIC) for corporate trustee changes within 28 days,
• ATO for any trustee/member changes within 28 days.
Process and documentation
Changing trustees involves multiple documents and steps. Common documentation includes:
• deed of appointment and/or removal of trustee,
• member resolutions,
• director consents and resignations,
• company constitution checks (for corporate trustees),
• EPOA (where applicable),
• ASIC Form 484 (for company changes), and
• ATO NAT 3036 form for SMSF updates.
A legal review of the documentation is highly recommended, especially for changes due to death, incapacity or residency concerns.
Tips for managing trustee changes
There are many standard actions to take when there is a change of SMSF trustees. These would include a review of the trust deed to determine whether it permits the proposed trustee structure.
Also, in the case of a corporate trustee, the company constitution needs to be checked to confirm the authority to appoint or remove directors.
All documentation, such as trustee declarations, consents and meeting minutes, must be retained for audit and ATO compliance.
Individuals involved should ensure the relevant reporting deadlines are met as delays can jeopardise compliance.
People faced with these circumstances should consult legal and tax professionals, especially when complex scenarios, such as member incapacity or blended families, are involved.
Being a trustee of an SMSF is not simply an administrative role; it is a legally enforceable fiduciary obligation. The decisions trustees make have long-lasting impacts on the retirement outcomes of fund members.
Understanding when and how trustee changes occur and executing them correctly is essential for preserving a fund’s complying status, avoiding penalties and ultimately protecting member benefits.
Walking the SMSF loan tightrope
There is a fine line between what is considered an SMSF loan and what is deemed the illegal early access of superannuation benefits. Shelley Banton examines the elements that separate the two types of actions.
If the purpose of superannuation is to build a nest egg to provide for retirement, why do the ATO statistics for 2022/23 reveal the most commonly reported contraventions are related to loans or financial assistance to members?
Representing 19 per cent of total contraventions, SMSF trustees are more likely to raid the fund’s bank account when they are financially stressed in either their personal or professional lives.
The ATO estimated SMSF trustees illegally accessed about $250 million in the 2022 financial year, with an additional $232 million withdrawn as loans to members.
While members are allowed to access their super after meeting a condition of release, and there are some legitimate reasons why a member can use their
super beforehand, it does not always play out that way.
Unfortunately, there is a fine line between providing a loan and illegal early access of benefits, with SMSF trustees walking the compliance tightrope in the eyes of the ATO.
Illegal early access
Where trustees access some or all of their retirement savings without meeting a condition of release, it is considered illegal early access.
The most common conditions of release include when the member:
• has reached their preservation age and retires,
• has reached their preservation age and begins a
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SHELLEY BANTON is head of technical at ASF Audits.
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transition-to-retirement income stream,
• ceases an employment arrangement on or after the age of 60,
• is 65 years of age (even if they haven’t retired), or
• has died.
There are also special conditions of release before a member reaches their preservation age that include:
• terminating gainful employment,
• permanent incapacity,
• temporary incapacity,
• severe financial hardship,
• compassionate grounds,
• terminal medical condition, and
• First Home Super Saver Scheme.
While SMSF members may also be encouraged by promoters of illegal early access schemes to withdraw money from their SMSFs, the trustees will still be held responsible by the ATO.
It is essential to note that funds obtained through an early release of money cannot be reimbursed and any attempt to return these funds will be considered a new contribution by the member.
Penalties for illegal early access
Where a member withdraws money without meeting a condition of release, there are significant tax and financial consequences. The withdrawal is classified as illegal early access and taxed as ordinary income at the member’s marginal tax rate, regardless of whether it was made intentionally or in error. Where a trustee contravenes section 166 of the Superannuation Industry (Supervision) (SIS) Act, an administrative penalty is imposed by law. The ATO’s application of the penalty is outlined in Practice Statement Law Administration (PSLA) 2020/3.
Different administrative penalties will apply depending on the specific breach associated with illegal early access. With a penalty unit currently worth $330, a breach of sections 65 and 84 of the SIS Act is worth $19,800 per contravention and a breach of section 34(1) is worth $6600 per contravention.
Trustee behaviour and circumstances will factor into the tax commissioner’s decision to remit the penalty in full, partially or not at all. The ATO will administer the penalties in line with the following four basic steps:
1. determine if a penalty is imposed by law, 2. determine who is liable for the penalty, 3. determine if remission is appropriate, 4. notify each trustee or each director to the corporate trustee of the liability to pay the penalty.
Let us take the example of James and Judy, both individual trustees of the JJ Super Fund, who authorised 10 withdrawals of $5000 from the fund’s bank account to purchase a new car.
The multiple withdrawals resulted from the financing arrangements for the purchase, which spanned over 10 months.
The trustees contravened sections 34 and 65 of the SIS Act 10 times because a
Table 1
condition of release was not met, resulting in the penalties as in Table 1.
As individual trustees, James and Judy are liable to pay $264,000 each before any penalties are remitted.
Based on the principles outlined in PSLA 2020/3, the ATO has determined the primary contravention occurs under subsection 34(1) and remits the total penalty by 600 penalty units (the section 65 penalty).
The ATO will also consider further remission because even though there were multiple withdrawals, they stemmed from a single course of conduct or behaviour.
By comparison, if the trustees had authorised access to money from their SMSF multiple times for separate courses of conduct, further remission may not be appropriate.
Can an SMSF lend money?
The answer is yes, as long as it is in the best interests of the member and the sole purpose test is met.
The loan must also comply with SIS Regulation 4.09 and be allowed by the trust deed to ensure trustees meet their
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Unfortunately, there is a fine line between providing a loan and illegal early access of benefits, with SMSF trustees walking the compliance tightrope in the eyes of the ATO.
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obligations under the covenants.
Where an SMSF has a bona fide loan agreement in place, it must be signed by both parties and established on commercial terms that comply with the arm’s-length requirements under Section 109 of the SIS Act before drawdown commences.
It means neither party has more favourable terms than the other and the transaction is one SMSF trustees would gladly enter into with a stranger.
Lending to a related party
While section 65 of the SIS Act prohibits a trustee from lending money to members, relatives and business partners, section 71 allows an SMSF to lend up to 5 per cent of the market value of the fund’s assets to a related company or trust.
Once again, the loan must be on arm’slength terms, with both parties acting in line
with the signed and dated loan agreement.
Where the loan exceeds the 5 per cent limit, dictated by the in-house asset provisions, at the end of the financial year the trustees must put a plan in place to dispose of the excess to 5 per cent or less by the end of the following income year. If this action is not taken, a breach of section 82 of the SIS Act will have occurred.
Regardless of whether market fluctuations adjust the excess back to 5 per cent or less in the following income year, the trustee is still required to dispose of the excess from the previous year.
It is important to note an SMSF is prohibited from lending money to a related entity that complies with SIS Regulations 13.22C and 13.22D. According to the rules, for the Regulation 13.22C entity to maintain its status as an exempt asset under the inhouse asset provisions, it must not extend a loan to another entity or incur a borrowing.
Genuine loans
The ATO is concerned SMSF trustees are disguising illegal early access actions as loans to members or relatives. While both are reportable compliance breaches under sections 62 and 65 of the SIS Act, respectively, trustees may actually be accessing money illegally and subsequently drawing up loan documents.
The purpose is to give these types of drawdowns a degree of acceptability as a loan to a member, thereby reducing the perceived risk of the breach in the eyes of the ATO.
Even if the trustee genuinely made an error by withdrawing money from the fund’s bank account instead of their personal account, the ATO’s position is that history cannot be rewritten.
A genuine loan to a member will have a loan agreement in place on arm’s-length
terms with regular interest repaid and all other terms met. It is not enough that the principal of the loan is repaid in a lump sum without interest when it is discovered during the audit.
What can also happen is that the error gets classified as a sundry debtor in the financials, which is then quickly changed to a loan to a member once queried by the auditor.
An even worse outcome is when the sundry debtor is reclassified as a loan to a related company or trust after being discovered during an audit.
The issue, once again, is that the trustee provides the draft loan documentation with the amended financials and the terms of the loan have not been met. The signed documents are then provided at the end of the audit before the final audit report is issued.
Under these circumstances, where the amount withdrawn exceeds $30,000 or the 5 per cent in-house asset limit, the loan is reported to the ATO as an in-house asset and breach of section 84 of the SIS Act
Fraudulent loan documentation
Whether trustees fraudulently backdate loan documents is not the concern of SMSF auditors. They receive various types of draft documents during the audit, including commercial limited recourse borrowing arrangements, and obtain the signed documents at the end.
SMSF auditors are required to use professional judgment and experience to provide an opinion on whether the financial report as a whole is free from material misstatement.
The SMSF independent auditor’s report states that “the risk of not detecting a material
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Trustee disqualification is permanent, with the names on the public record forever. It could appear in any background check, which can also affect the person’s personal and professional reputation.
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misstatement resulting from fraud is higher than for one resulting from error as fraud may involve collusion, forgery, intentional omissions, misrepresentations or the override of an internal control”.
As a result, fraud and other illegal acts can only be detected where the audit procedures are designed to identify such acts, as seen in the Melissa Caddick case. While SMSF auditors must independently confirm and verify the existence of assets in an investment report through their audit procedures, they cannot identify fraud from a draft Word document. Where they are found to be false and misleading, SMSF trustees will be liable for penalties from the ATO. When an SMSF professional is involved in backdating documents, they risk compromising their professional accreditation as fraud can result in ATO fines, referral to their professional body or criminal
charges laid due to illegal behaviour.
Trustee
disqualification
In its “Levelling-up SMSF Compliance: The Regulator’s Update” (QC 101234), published in February 2024, the ATO reported 66 per cent of illegal early access cases involved individuals who had joined the system without intending to run an SMSF and disqualified 692 trustees that financial year.
A further 462 were disqualified in the nine months to March 2025, demonstrating the ATO has no hesitation in disqualifying SMSF trustees who use the fund’s bank account for personal reasons.
Trustee disqualification is permanent, with the names on the public record forever. It could appear in any background check, which can also affect the person’s personal and professional reputation.
The ATO holds SMSF professionals to a higher standard. Disqualified trustees who are SMSF auditors or hold an Australian financial services licence are referred to the Australian Securities and Investments Commission, while tax agents are referred to the Tax Practitioners Board.
While there is no single set of prescriptive rules the ATO follows to disqualify a trustee, factors contributing to its decision depend on the seriousness of the contravention, the number of contraventions that have occurred and the likelihood the trustee will continue to be non-compliant.
Voluntary disclosure
Voluntary disclosure allows SMSF trustees to disclose contraventions that have not been rectified to the ATO voluntarily.
Anecdotal evidence suggests dealing with the ATO through the early engagement voluntary disclosure process for high-risk breaches, such as illegal early access, may provide better outcomes for trustees than
waiting for the regulator to conduct its own review.
The voluntary disclosure form must state only the facts and include any supporting documentation. Most importantly the trustee must include either a rectification proposal or a proposed enforceable undertaking in the form.
The proposal should be clear and provide terms that rectify the breach as soon as possible. Treating the repayment of illegal early access in the same manner as a personal bank loan would not be well received.
The ATO expects trustees to actively engage with it and demonstrate measures have been implemented to prevent similar contraventions in the future.
Where there is a disagreement between the trustee and the SMSF auditor regarding whether a transaction constitutes a loan to a member or illegal early access, the trustee should apply to the ATO for SMSF-specific advice.
Conclusion
The high-risk nature of prohibited loans in an SMSF means that when an auditor lodges an auditor contravention report, the ATO will respond accordingly.
Regardless of whether the transaction is classified as an SMSF loan or illegal early access, SMSFs are walking a compliance tightrope.
Non-lodgers, promoters of illegal early access schemes and early access disguised as loans to members are all red flags to the ATO that can result in removal from Super Fund Lookup, an ATO audit, trustee disqualifications and severe financial and tax consequences.
Education remains the key to ensuring SMSF trustees stay on the path to compliance and maintain the integrity and safety of the superannuation system.
Stay in your lane
Providing SMSF advice involves a confluence of legal parameters and practitioners must know the services they can and can’t offer in this context, Mary Simmons writes.
There are now over 647,000 SMSFs in Australia collectively holding more than $1 trillion in assets. This unprecedented concentration of private retirement wealth means disputes over SMSF assets are not only becoming more common, they are inevitable. With trillions of dollars held in super and savings expected to be passed down to younger generations over the next 10 to 15 years, the volume and complexity of these disputes are only set to grow.
For SMSF advisers this shifting landscape brings new dimensions of risk. Trustees increasingly look to their accountants, financial planners, auditors, administrators, tax agents and lawyers for advice. But when that advice crosses regulatory boundaries, the consequences can be significant.
One underappreciated risk is section 55 of the Superannuation Industry (Supervision) (SIS) Act 1993, which provides a right to claim compensation from contraventions of the statutory trustee covenants. While this provision has seen little judicial interpretation, particularly in the SMSF context, its broad drafting and undefined scope add another layer of complexity.
It raises the real risk a practitioner involved in the advice chain could find themselves drawn into
litigation if their conduct is seen to have contributed to a breach of trustee duties.
Let me be clear: I’m not a lawyer and this article is not legal advice. Rather, it’s a practical look at the blurred boundaries practitioners must navigate when advising SMSF trustees. The intersecting regulatory frameworks between legal, tax and financial product advice are complex, and if in doubt, professionals should seek a legal opinion or refer their client to another suitably qualified adviser.
Clear client engagement documents, including client acknowledgements, and appropriate disclaimers are integral to managing client expectations and regulatory, or professional, obligations. However, they do not shield SMSF advisers from scrutiny. If the substance of the conduct resembles legal, tax or financial product advice, it may well be treated as such, regardless of how it is presented.
Key legal frameworks
Three primary legislative frameworks shape the SMSF advisory boundaries and inevitably overlap in practice.
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MARY SIMMONS is head of technical at the SMSF Association.
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The Tax Agent Services Act 2009 (TASA) mandates tax agent services must be provided by a registered tax agent, which includes activities such as ascertaining tax liabilities, entitlements and obligations under taxation laws administered by the commissioner of taxation, or representing clients before the ATO.
The legal profession laws, administered by each state and territory, regulate people practising law or providing legal services to prohibit unqualified legal practice. Serious penalties apply for preparing legal documents or providing legal advice without a practising certificate.
Finally, the Corporations Act 2001 regulates the provision of financial product advice and services. In particular, section 911A requires anyone carrying on a financial services business to hold an Australian financial services licence (AFSL) or be appropriately authorised for the financial product advice or service they provide.
For SMSF advisers the challenge lies in understanding the boundaries between these regulatory frameworks and staying within their respective lane.
The slippery slope
There is no uniform definition of what it means to practise law across jurisdictions and as a non-lawyer, my understanding is necessarily general. However, some common threads emerge. Legal practice typically involves preparing documents that require specific knowledge of legal principles, advice to clients as to their rights and obligations, and interpreting how the law applies to a client’s specific facts or circumstances.
This means preparing or amending SMSF trust deeds, drafting binding death benefit nominations or interpreting how a deed interacts with other legal obligations will generally fall within the scope of legal practice. These are not simply administrative documents as they can affect legal rights, particularly in the event of disputes or death
benefit claims.
Importantly, legal practice is not confined to document drafting. It extends to any activity involving the application of law to a client’s situation or guidance normally given by a lawyer.
Even when using standardised templates or pre-populated forms vetted by a lawyer, the moment an adviser customises, interprets or explains them in context for a client, they walk a very fine line and risk crossing into unqualified legal practice.
Tax and legal advice
Section 50-5 of the TASA permits registered tax agents to charge a fee or other reward for providing ‘tax agent services’ defined in section 90-5 to include ascertaining and advising on liabilities, obligations and entitlements arising under taxation laws.
Importantly, ‘taxation law’ under the TASA is limited to commonwealth tax laws administered by the tax commissioner, including some provisions of the SIS Act, but only those for which the ATO is responsible.
The TASA does not permit advice on trust law, trustee duties or state taxes like stamp duty or land tax. Nor does it allow the establishment of legal entities or the creation of legal rights and obligations within those entities, such as setting up a company, trust or SMSF, tasks clients often seek help with from tax agents and accountants.
In today’s environment of do-it-yourself providers and artificial intelligence tools, the risk of unintentionally engaging in legal practice is growing.
For example, where a client has already resolved to establish a company to act as trustee of their SMSF and the incorporation documents have been vetted by a legal practitioner, a registered tax agent may assist with administrative steps, such as lodging forms with the Australian Securities and Investments Commission (ASIC) or overseeing execution. However, once that activity extends into explaining the legal effect of the company constitution, the nature of shareholder rights or directors’ obligations, the line into legal advice may be
Trustees increasingly look to their accountants, financial planners, auditors, administrators, tax agents and lawyers for advice. But when that advice crosses regulatory boundaries, the consequences can be significant.
crossed.
Advisers who rely on external providers for SMSF establishment or trust deed documents should, at a minimum, ensure those providers are reputable and the templates they offer are developed or supported by appropriately qualified legal practitioners. Crucially, advisers should not alter them for specific clients. Instead, this should be referred to a legal practitioner to complete.
A tax agent service also includes the provision of financial advice relating to tax. This is typically advice provided by a financial adviser with regard to investment products. Practitioners will only be permitted to provide this type of advice if they satisfy the requirements that would see them considered to be a qualified tax relevant provider.
Professionals of this ilk are primarily regulated by ASIC and the Financial Advisers Register confirms whether an individual in practice can provide financial advice relating to tax.
Just to add to the complexity, general or wholesale advisers who provide financial advice relating to tax must register with the Tax Practitioners Board as a tax agent and will likely have a condition on their registration
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stipulating they can only provide this level of advice.
In all cases, the context and intent of the advice is critical. Ensuring advice is clearly framed around taxation outcomes is key to staying within the safe boundaries of the TASA framework.
Financial product advice
Section 766B of the Corporations Act defines the meaning of financial product advice to include a recommendation or statement of opinion intended to influence, or that could reasonably be seen as intended to influence, a person’s decision about a financial product or class of products.
The definition is broad, but also extremely complex. It covers not just overt recommendations, but also opinions or assessments that could shape a client’s choices and those that could reasonably be regarded by the client as intended to have such influence, even if this was not the intention of the adviser.
An SMSF is a financial product and therefore a recommendation or statement of opinion to set up a fund or, just as importantly, not set one up is financial product advice. It requires the adviser to be appropriately authorised under an AFSL.
Importantly, the financial product advice is defined to exclude advice:
• provided by a lawyer in their professional capacity about matters of law, legal interpretation or the application of the law, and
• provided by a registered tax agent given in the ordinary course of activities as a registered tax agent as reasonably regarded as a necessary part of those activities.
It is also possible for an unlicensed adviser to provide factual information, for example, comparing the different types of superannuation funds available to a client. However, care must be taken to ensure the factual information is not presented in a
manner where the client considers it to be influencing them to make a decision.
Further, if the adviser has an existing relationship with the client and understands their financial situation or needs, the circumstances may lead a client to believe any advice provided is personal financial product advice because many individuals do not understand who can and cannot provide them with different types of advice.
The fallout Crossing professional boundaries can result in a range of consequences from disciplinary action, regulatory penalties, civil liability and even the loss of professional indemnity (PI) insurance.
Providing services outside one’s licensing or registration can constitute professional or regulatory misconduct, leading to reprimands, suspension or cancellation of licence or registration from both the regulator and, if applicable, a professional association.
The Australian Financial Complaints Authority has also repeatedly ruled against financial advisers where advice was outside their authority or inadequately documented, noting disclaimers cannot override licensing breaches. The result is payment of financial compensation to the client and a possible referral to ASIC for further investigation.
Importantly, the PI insurance safety net may only function where the adviser acts within their licensed remit as most policies exclude cover for unlawful conduct or services beyond the insured’s authorised scope. In such cases, the adviser will be left personally exposed to damages and legal costs.
Finally, there are serious ethical implications. Acting without appropriate authority undermines client trust, compromises the duty to act with integrity and breaches codes of conduct requiring advisers to act within the bounds of their competence.
Many regulatory frameworks and statutory codes of conduct emphasise honesty,
Providing services outside one’s licensing or registration can constitute professional or regulatory misconduct, leading to reprimands, suspension or cancellation of licence or registration from both the regulator, and if applicable, a professional association.
due care and acting in the public interest –principles that are directly challenged when an individual operates beyond their lawful remit. Ethical breaches can also compound the seriousness of a regulatory violation and influence the severity of any disciplinary action taken.
Putting
it all together
The SMSF ecosystem is a complex intersection of regulatory frameworks and no single adviser can, or should, cover it all.
Success requires technical competence, a clear understanding of regulatory limitations, the discipline to stay within scope and be transparent with clients about authorised activity.
Collaboration is also essential. Working relationships involving a variety of professionals such as legal practitioners, licensed advisers or tax agents, enable a more complete service without breaching professional boundaries.
In an increasingly complex and litigious environment, the safest and most effective path is shared whereby professionals need to do their part well and know when to call in others.
Technical Summit is back this August!
6-7 August 2025
Sydney Masonic Centre
Technical Summit 2025 delivers two dynamic days of in-depth technical content and interactive workshops, delivered by the SMSF industry’s most respected experts!
The advanced content is designed to challenge and elevate the skills of those already operating at a high level within the SMSF sector
With a greater emphasis placed on workshop learning, attendees can expect to participate in lively, thought-provoking discussions with industry leaders
An ever-changing landscape
Jemma Sanderson provides the latest update on transfers from the UK pension framework to the Australian superannuation system.
As many readers of this publication will be aware, the UK pension legislation suffers from as many changes as the Australian superannuation system.
This author has penned five articles over the past few years regarding UK transfers with the strategies to implement and the areas of which to be aware.
The latest update in that regard was in Issue 046 of this publication, with consideration of the view of His Majesty’s Revenue and Customs (HMRC) on lump-sum payments and also the ATO’s interpretation with respect to the calculation of the applicable fund earnings (AFE).
Since that article in June 2024, there has been further public confirmation of HMRC’s position on lump-sum payments and therefore clarity regarding the strategies from the UK perspective.
A refresh of the UK position
Where an individual has a UK pension account, or multiple accounts, once they reach UK pension age,
currently 55 but increasing to 57 imminently, they are able to transfer their pension accounts directly to an Australian SMSF that is a recognised overseas pension scheme (ROPS). Where that occurs, the UK will not withhold any tax provided the individual does not exceed their overseas transfer allowance (OTA). The standard OTA is £1,073,100. Some people may have a higher one, however, that is becoming rarer and since April 2025 the opportunity to apply for a higher OTA has now lapsed.
Where a transfer is in excess of the OTA, HMRC will impose a 25 per cent OTA charge on the amount transferred that is greater than the OTA, which is withheld by the pension scheme at the time of the transfer.
UK locals, that is, tax residents, are taxed on any drawdown from their pension as if it is normal income and so it is effectively fully taxable. The underlying
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JEMMA SANDERSON is head of SMSF and succession at Cooper Partners.
Table 1
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assets in their pension account, however, are not subject to tax. So the difference between the UK and Australia is the British pay no tax on the pension earnings, but full tax on the drawdowns. In Australia we pay tax along the way, but in decumulation phase the drawdown itself is tax-free and the underlying assets may benefit from the tax exemption.
UK locals can also receive what is called a pension commencement lump sum (PCLS) up to one-quarter of their domestic pension, or £268,275, whichever is the lesser. This is tax-free. If the individual is no longer a local but a resident of Australia, they are still eligible for the PCLS, which is still tax-free in the UK, but will often not be from an Australian perspective.
The OTA was introduced from April 2024 where previously it was referred to as the lifetime allowance (LTA). The LTA imposed a 25 per cent charge on benefits not only transferred to another jurisdiction, but also on payments received whether local or not. Since April 2024, when the LTA charge was scrapped and the OTA introduced, it has only been overseas transfers potentially subject to the OTA charge, whereas a local could nominate to receive their pension in the form of a lump sum or regular, or irregular, payments without any further charge, save for the local income tax on payments received.
As outlined in previous articles, namely that from Issue 041, there had previously been the opportunity to transfer an amount
to an Australian ROPS and remain within the non-concessional contribution (NCC) cap, with any balance then transferred to the individual directly. With consideration for the double taxation agreement (DTA), this had the outcome of the benefits transferred to the individual as a lump sum not being taxed in the UK (given the DTA and HMRC’s treatment of these payments under the pensions article) with no tax in Australia (as such payments were considered lump sums under the Australian provisions and any AFE was already transferred to the Australian ROPS).
In Issue 046, we identified HMRC’s potential change of interpretation on the above with respect to the lump sum payments and the application of the DTA. Lump sum payments aren’t directly referenced in the Australia/UK DTA and our experience, until December 2023 when we first had wind of this interpretive change, had been that where there was more than one lump sum, HMRC would apply the pensions article to such payments. This means Australia would have the taxing right. The change was that where any payments were lump sums, or akin to a lump sum (anything that wasn’t almost an annuity-type payment/regular payment), HMRC would apply a different DTA article where it would assert its taxing right.
Back then (June 2024) that position had not been finalised, although the change of position was becoming evident more practically where nil tax codes were not being issued by HMRC. Since then, on 12
As a result of these changes, we now can’t rely on the DTA to transfer substantial amounts directly to individual Australia residents without adverse UK tax implications.
March 2025, HMRC updated its online resources and confirmed the change of interpretation in this regard.
What does this mean?
As a result of these changes, we now can’t rely on the DTA to transfer substantial amounts directly to individual Australian residents without adverse UK tax implications. In practice, this is what it looks like:
1. HMRC is not issuing new nil tax codes, or where it may do, there are substantial delays in one being issued (12 months or more). This is especially the case where the first payment received is a lump sum and not a pension payment.
2. Without a nil tax code in place with the relevant pension scheme, any payments to the individual are subject to withholding by the pension scheme at UK marginal tax rates and often worse.
3. Even having a nil tax code in place doesn’t prevent HMRC from asserting its taxing right to the payment. Accordingly, there are substantial ramifications with respect to any one-off payments, akin to lump sums directly to the individual, from a UK scheme.
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Table 1: Luke’s benefits
1 (£)
(1.0:2.0)
(a) Value at date of residency
(b) Contributions made since residency
(c) Other foreign transfers
(d) Value at date of transfer
(e) Difference in value (AFE) ((d) less sum (a) to (c))
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A refresh of the Australian position
Believe it or not, this side of things remains complex and highly dependent on the timing of when the individual set up their current pension scheme in the UK, whether it was before or after they became a resident. In this regard, we are not talking about their period of service that resulted in the accumulation of benefits in the UK pension environment, but rather the date of establishment of the source scheme from where any transfer to Australia is derived.
Example:
Luke, 58, has been a resident of Australia for 17 years. He has £450,000 in a UK pension scheme. Luke derived that benefit from working for 20 years at a single employer, and when he left 17 years ago, he moved his benefits to a new UK scheme (Scheme 1). He set up the current UK scheme before he was an Australian resident.
When Luke then seeks to transfer his benefits to an Australian ROPS, section 30575 of the Income Tax Assessment Act 1997 (ITAA) will apply to the calculation of the AFE for Luke. Let’s say the ultimate breakdown of
his benefits is as per Table 1.
If Luke didn’t want to exceed his NCC, and was happy to drip feed his benefits to Australia (refer to Issue 040 for more details on this option, which is often not preferred as there are superior options), then he might look to transfer the equivalent value of his AFE component, £150,000, plus an amount up to his NCC, let’s say £175,000. Luke would have to transfer the £325,000 to a separate UK scheme (Scheme 2) before transferring to a ROPS, otherwise the £150,000 AFE would be taxable to him.
Where Luke transferred the £325,000 from Scheme 1 to Scheme 2 to the ROPS, he would then have AFE of £150,000 and NCC of £175,000, as intended.
In the situation that Luke had transferred his employment benefits to a new scheme (Scheme 1) after becoming an Australian resident, say right now he moves from the employer defined benefit scheme to a new scheme, the position is quite different when the above strategy is implemented, due to a different provision of section 305-75 of the ITAA
Luke’s transfers would be as follows: Employer Scheme to Scheme 1
Scheme 1 to Scheme 2
Scheme 2 to ROPS
£450,000
£325,000
£325,000
We recommend caution is exercised with respect to any partial transfer of benefits from the UK to Australia as the expected AFE
calculation,
and therefore the tax payable, could be substantially higher than expected.
If Luke transferred £325,000 from Scheme 1 to Scheme 2 to then subsequently transfer to the ROPS, the AFE on the ultimate transfer would be £275,000, calculated as in Table 2.
As the above AFE amount of £150,000 is deferred as Luke has transferred his benefits from a foreign scheme to another foreign scheme, it is then classified as previously exempt fund earnings (PEFE) within Scheme 1.
When £325,000 is transferred from Scheme 1 to Scheme 2, the AFE on that transfer is as per Table 3, where that transfer by itself has an AFE calculation undertaken, as well as the addback of any PEFE.
Item (f) in Table 3 is then the PEFE in Scheme 2. When Scheme 2 is then transferred to the ROPS, the numbers are as per Table 4.
The above arises due to the timing of when Luke sets up his UK schemes and undertakes any transfers once he is a resident
Table 2: AFE on Employer Scheme to Scheme 1
3: AFE on Scheme 1 to Scheme 2
(a) Part of the transfer to Scheme 2 that relates to rollover from another fund*
(b) Contributions made to Scheme 1 since transfer from Employer Scheme
(c) Value at date of transfer
(d) Difference in value ((c) less sum (a) and (b))
(e) Add: PEFE (as calculated in Table 2)
(f) AFE on the transfer from Scheme 1 to Scheme 2 ((d) plus (e))
Table 4: AFE on Scheme 2 to ROPS
(a) Part of the transfer to ROPS that relates to rollover from another fund*
(b) Contributions made to Scheme 2 since transfer from Scheme 1
(c) Value at date of transfer
(d) Difference in value ((c) less sum (a) and (b))
(e) Add: PEFE (Table 3)
(f) AFE on the transfer from Scheme 2 to ROPS ((d) plus (e))
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of Australia. As per the previous article in Issue 046, this is a change in interpretation by the ATO and as is evident can have a substantial impact on the transfer to the ROPS as there would be a much higher assessable component and a lower NCC component (now only £50,000). This is not as intended.
The ATO’s view with respect to the above is as outlined in several private binding rulings and appears to be the approach the author
has experienced since being aware of this interpretation by the regulator in December 2023.
The outcome
Given the above HMRC and ATO positions, highly summarised above (and the application of the provisions to every individual is different, depending on their circumstances), we recommend caution is exercised with respect to any partial transfer of benefits from the UK to Australia as the expected AFE calculation, and therefore the tax payable, could be substantially higher than expected. In Luke’s situation it amounts to a $37,500 additional liability in his ROPS.
Further, we would suggest any transfers of benefits to Australia are undertaken to ROPS from the UK scheme, and not to the individual, as one or more lump sums directly. This includes those with respect to a PCLS as, although that might be tax-free in the UK, it could be fully taxable in Australia.
Let’s say Luke wanted to take a PCLS from his account prior to any transfer. He would be eligible to withdraw £112,500 (one-quarter of £450,000) that would be tax-free in the UK. However, that entire amount ($225,000 equivalent) would be taxable in Australia in his own name at his marginal tax rate. If that was his only income in Australia, that is still about $72,000 in tax to be paid.
Strategies – a new hope
There are some strategic opportunities with respect to the above positions to contemplate, however, they come with timing, taxation and transaction cost considerations. Specialist advice is recommended and the application of the provisions of the ITAA will be different for each individual.
Notwithstanding that the above is confusing, there is clarity on the position on both sides to enable transfers with some certainty.
Table
The cryptocurrency push
The interest in cryptocurrency investments is growing among SMSF trustees, particularly those of a younger demographic. Grant Abbott examines how to include these types of electronic assets inside a fund.
SMSFs are getting a big following among the under 45s as they look to invest in property and cryptocurrency. Jump on any social media account, particularly YouTube or TikTok, and you will see SMSFs being highlighted as vehicles to transfer superannuation to invest in speculative digital currencies. But it is not that easy as this detailed case study shows.
Meet the crypto enthusiasts
John and Sally hold a combined $220,000 in their respective industry super funds. They have two young children, Josie, 5, and Sam, 2, and in the event of their death, Sally’s mother, June, will act as their guardian. Their vision is clear. Following research on social media, they decide to establish their own SMSF to allocate a portion of their retirement savings to Bitcoin (BTC) and Ethereum (ETH). Although the influencers they follow make it sound easy, the compliance reality is different.
To this end, we will look at:
1. SMSF macro context – a review of the surge of industry fund members into SMSFs.
2. The statutory and practical steps to move from an Australian Prudential Regulation Authority (APRA)regulated fund to an SMSF.
3. Why a corporate trustee and a specific trust deed are non-negotiable.
4. How a compliant investment strategy must address digital assets, liquidity, insurance and succession.
5. A data-backed 10-year performance review of BTC and ETH and how it shapes portfolio construction.
6. A project timeline.
7. Comparative case studies regarding relevant advice.
SMSF establishments
Recent analysis and articles show there is a growing trend for the millennial and generation Z cohorts to take more interest in their super than generation X has, reverting to the interest shown by baby boomers. Anecdotally this has been sparked by property and cryptocurrency investments.
According to ATO data, these demographic groups accounted for 24,800 establishments in the 2023 income year and the figure is expected to reach 27,950 in the 2024 financial year, representing 13 per cent year-on-year growth.
Further, the statistics indicated 79 per cent of new SMSF members in the 2024 financial year were 45 years of age or younger – a demographic shift potentially driven by digital asset and property
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GRANT ABBOTT is SMSF and family wealth protection strategist at LightYear Legal.
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appetite.
Member profile and objectives (see Table 1)
John and Sally wish to:
• control superannuation asset selection,
• maximise their retirement savings,
• gain early exposure to crypto inside super to enjoy the capital gains tax concession, and
• maintain appropriate risk cover and build an estate plan with family wealth protection for their children.
Ten-year performance snapshot to 1 June 2025 (see Table 3)
Volatility remains materially higher than listed equities. Hence trustee minutes must evidence stress testing on downside scenarios, for example, one involving an 80 per cent drawdown, to satisfy SIS Regulation 4.09 and audit scrutiny.
Designing a crypto-compatible investment strategy
SIS Regulation 4.09 requires explicit A corporate trustee structure, a cryptoenabling deed, a rigorously documented investment strategy and properly replaced risk cover form the backbone of compliance.
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Table 1: Review of John and Sally
Table 2: Industry super to SMSF conversion roadmap
STRATEGY
commentary on:
1. Risk/return: Bitcoin 10-year annualised approximately equal to 78 per cent and Ethereum approximately equal to 105 per cent. Position size limited to 40 per cent of total assets ($88,000) to moderate volatility.
2. Diversification: Retain 60 per cent in broad market exchange-traded funds or listed investment companies for balance.
3. Liquidity: Crypto positions can be liquidated 24 hours a day and seven days a week, however, exchange outages and cold storage latency must be documented in liquidity analysis.
4. Member insurance strategy: Replace or exceed existing cover.
5. Valuation policy: Price feeds from CoinMarketCap (UTC 00:00) converted
to Australian dollars at the Reserve Bank of Australia spot.
6. Storage and audit trail: Hardware wallet with seed phrase held in bank vault; duplicate held by June (Sally’s mother and children’s guardian) under sealed deed of confidentiality.
A minute template must record each element and should be revisited quarterly due to price volatility and ensure the current position remains within the bands of the investment strategy.
Risk insurance (see Table 4)
SIS Regulation 4.09(2)(e) only requires consideration and Guidance Statement 009 warns auditors to qualify if no documentary evidence exists. A statement of advice by an Australian financial services licensed insurance broker under the Corporations Act must detail premium funding and claims proceeds allocation.
Disaster of doing it yourself (see Table 6)
Penalties resulting from these errors could eventuate in the forced sale of crypto-assets at depressed prices and poor outcomes for the family.
SMSF specialist differentiation
Table 7 illustrates how Level 2 provides holistic protection, preserving value and governance continuity if John and Sally die together.
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Table 4
will or child pension provisions
Recent
analysis and articles show there is a growing trend for the millennial and generation Z cohorts to take more interest in their super than generation X has, reverting to the interest shown by baby boomers.
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Conclusion and strategic imperatives
Establishing an SMSF to invest in BTC and ETH is not necessarily a fringe activity, but is becoming a mainstream, regulatorrecognised pathway when executed within the SIS framework and documented under a deed that expressly empowers digital assets. A corporate trustee structure, a cryptoenabling deed, a rigorously documented investment strategy and properly replaced risk cover form the backbone of compliance.
John and Sally’s long-term success and the security of Josie and Sam hinges on professional guidance that extends beyond mere set-up.
With more of the younger generation exiting industry funds in the past few years, John and Sally are joining a surge of trustees who refuse to outsource their investment edge. The regulatory pathway is clear; the strategic upside is compelling; the risks, while real, are entirely manageable when governance is built first and trades come second.
Further, trustees must realise trying to execute any SMSF strategies themselves is a pathway to guaranteed trouble.
Table 6
Table
COMPLIANCE
Passing the baton
Knowing who is responsible for certain SMSF obligations after a change of individual trustees is critical and complicated. Michael Hallinan examines the legal approach to these circumstances.
Circumstances can occur during the life of an SMSF whereby a change needs to be made to the make-up of the fund trustees. When this situation arises, it needs to be determined who is then responsible for the SMSF annual return (SAR), the tax return and any resulting ATO liability. This article will address this issue.
General legal rules
There are general legal rules that are relevant to this issue. First, unlike companies, or more generally corporations, SMSFs are not legal persons. This means an SMSF cannot own property, enter into or be bound by contracts, commit torts and sue or be sued. It is the trustee of the SMSF that owns the property, it is the trustee of the fund that enters into or is bound by contracts and commits torts and it is the trustee of the SMSF that sues or is sued.
Despite the legal position, in everyday discourse the SMSF is treated, at least grammatically, as if it is an entity. For taxation and accounting purposes, the SMSF is treated as a taxation entity and as an accounting entity.
As the SMSF is not a legal entity, it is the trustee that incurs fund liabilities. Trustees have a right of indemnity in respect of properly incurred trust liabilities so they can either pay the tax from personal funds and then be reimbursed from the assets of the SMSF or pay the debt directly using fund assets. While they have a right of indemnity, this does not necessarily mean they will be indemnified as there may simply be insufficient SMSF assets to cover the costs in question. Nevertheless, they have the right.
In terms of liabilities incurred by the trustees, it is the trustees at the time the liability is incurred that are personally liable for it. In relation to income tax liability,
this liability arises immediately before the end of the financial year.
Having a right of indemnity means the trustees have proprietary interest in the SMSF’s assets because the interest is property and can be assigned to third parties, and that this interest is only recognised in equity and enforceable by equitable proceedings. So in a way the trustees are beneficiaries of the SMSF.
However, the interest relating to the trustees is different from that of an SMSF member. Members have the most complete and superior beneficial interest, while the interest the trustee has due to the right of indemnity is a lesser beneficial interest. This interest of the trustee arises by reason of and to the extent required to satisfy right of indemnity. If the liability giving rise to the right of indemnity ceases, for example, if the liability is discharged by payment from the fund or the trustees have discharged the liability and they have been reimbursed from the assets of the fund, then the equitable property interest also ceases. The equitable interest arises by reason of the liability and once the liability is satisfied, the interest is extinguished.
Further, the right of indemnity continues to exist even if the trustee has retired or been removed as trustee. However, the right of indemnity will cease if the current trustees discharge the liability.
In relation to super funds, taking income tax liabilities as an example, the trustee that incurs the tax liability in respect of the 2025 financial year will be the trustee immediately before the end of the 2025 financial year, that is, the trustee at 11.59pm on 30 June 2025 for this year. The argument is that, at the close of the 2025
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MICHAEL HALLINAN is superannuation special counsel at SuperCentral.
3
4
5
financial year the income tax liabilities of the super fund immediately arise, the liability may not then be known or may not even be quantifiable, however, the amount of tax due in the 2025 financial year will, in due course, be determined and expressed as a specific dollar amount. This is the view of the ATO as
Accountant’s
set out in paragraph 7 of Practice Statement Law Administration (PSLA) 2012/2 (revised 16 January 2025). In relation to other taxation liabilities that may apply to SMSFs, such as goods and services tax (GST) liabilities and payas-you-go (PAYG) imposts, a similar position would occur. In relation to GST, it is the trustee at the end of the relevant reporting period that incurs the liability. In relation to PAYG, it is the
30 June 2025 – income tax liability incurred – but quantum not yet known. Income tax liability incurred – but not yet quantified.
CGT event occurred but is disregarded. Accountant’s fees incurred but not yet
Deemed assessment by reason of lodgement (tax not due until 1
but
Trustee
in
trustee at the time of payment to which the withholding should have occurred.
Hypothetical situation
Table 1 shows an SMSF that has experienced a sequence of changes to the individual trustees of the fund in relation to the 2025 financial year
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THE SUPER PLAYBOOK 2025
Regulatory Roadmap: Navigating Super Law and Regulations
Natasha Panagis Head of Technical Services Institute of Financial Professionals Australia (IFPA)
Ashley Course Director ARC Super SMSF Asset Valuation: Getting the Evidence Right
Superannuation Under Siege: Preparing for Div 296
Natasha & Stuart Institute of Financial Professionals Australia (IFPA)
The Catch with Contributions
Stuart Sheary Senior Technical Services Specialist Institute of Financial Professionals Australia (IFPA)
Peter Bobbin Consultant Lawyer Disability & Death - An Auditor's & Advisor’s Dilemma
What Goes Wrong Before the Audit: SMSF Accountants' Top Compliance Challenges
DANIEL BUTLER (pictured) is director and BRYCE FIGOT special counsel at DBA Lawyers.
The idea of holding a rental property inside an SMSF is common among trustees. Daniel Butler and Bryce Figot unpack some of the more complex details involved with this strategy.
The ATO is placing increased scrutiny on rental and property-related matters as its recent sector data suggests 90 per cent of taxpayers are not meeting the current tax rules. When you think about the complexity of the superannuation rules also to be considered on top of the existing tax rules relating to rental properties, we recognise SMSF trustees and advisers are likely to need some assistance in this area.
Advisers must stay well informed about recent developments in the areas of taxation, superannuation and property investment as a failure to navigate these intricacies can lead to significant tax and financial repercussions.
This article focuses on some key tax considerations relating to SMSFs and residential property investments.
Repairs v improvements
It is critical SMSF trustees understand the distinction between repairs and improvements. Broadly, a repair restores something to its original condition. In contrast, an improvement enhances or extends an asset’s useful life.
A repair is deductible whereas an improvement may add to the cost base of the asset for capital gains tax (CGT) purposes.
Significant penalties can be imposed for incorrectly classifying these outgoings.
Repairs and maintenance
Repairs and maintenance restore the efficiency,
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form or function of the asset without altering its original character. These costs can generally be claimed as an immediate tax deduction in the financial year in which they are incurred. Examples include fixing a broken window or a leaking roof.
Broadly, a repair can only be claimed to the extent the asset is used to produce assessable income. We will cover this point in more detail below given an SMSF may be wholly or partly in retirement or pension phase.
Moreover, it should be noted initial repairs, those aimed at fixing pre-existing damage or defects present at the time of purchase whether known to the buyer or not, are classified as capital expenses and are not deductible.
In this regard it is important to consider whether a repair needed shortly after the purchase of a property is an initial repair or one that arose after the acquisition of the property. An initial repair is not deductible and adds to the cost base of the asset for CGT purposes. Invariably, when an investment property is purchased to rent and in turn derive assessable income, there are a range of repairs to undertake to make the property in sound order and condition for it to be rented out.
Capital works and improvements
Any works or alterations that enhance a property beyond its original state and condition are generally treated as capital works or improvements.
According to Taxation Ruling (TR) 97/23, an improvement provides a greater efficiency of function in the asset usually with regard to an existing function. This might involve replacing an existing workable awning for aesthetic purposes or replacing a broken-down water heater with a better quality and more efficient one that has numerous advantages over the prior unit.
Improvements are generally not deductible, but the costs might be able to be claimed over the life of the asset via depreciation deductions under Division 40 of the Income Tax Assessment Act 1997 (ITAA 1997) if the asset constitutes plant or equipment used to derive rent. Alternatively, an improvement may need to be added to the cost base of the asset for CGT purposes and written off over a period of time. Division 43 of the ITAA 1997 allows for a deduction for building and structural improvements that can be written off, typically at 2.5 per cent a year, over the ownership period.
A person who disposes of capital works to another person is required to provide a notice under section 262A(4AJA) of the ITAA 1936 about the transferor’s capital works that allows the transferee to determine how their ITAA 1997 Division 43 claim will apply to them. Where a taxpayer is unable to get this capital works information, for example, where a landlord cannot obtain it from a departing tenant who has made fit-out improvements to a property, they can engage a quantity surveyor to calculate the remaining capital works
Advisers must stay well informed about recent developments in the areas of taxation, superannuation and property investment as a failure to navigate these intricacies can lead to significant tax and financial repercussions.
amount for Division 43 purposes.
Depreciation
Division 40 of the ITAA 1997 contains the uniform capital allowance system rules or depreciation deduction rules. Depreciation deductions are available for most assets used in the production of income, including plant and equipment. Broadly speaking, Division 40 provides a deduction for the decline in value of assets based on the effective life of the relevant plant and equipment.
However, from 1 July 2017, a significant change occurred such that a depreciation deduction is reduced or denied where the asset is used to derive
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rental income from the use of residential premises to provide residential accommodation (but not in the course of carrying on a business) and the asset was a second-hand depreciating asset.
For those who can recall, a purchase of an investment property to derive rent from residential premises enabled the purchaser, before 1 July 2017, to claim the balance of depreciation on any used or second-hand plant and equipment, such as dishwashers and hot water services, acquired with that property. In the event the purchaser did not obtain the details of the writtendown balance of these items of plant and equipment acquired prior to 1 July 2017, the purchaser could engage a quantity surveyor to prepare a report that would maximise the depreciation claims on any plant and equipment purchased with the property, as well as confirming the value of any claims under Division 43.
However, from 1 July 2017, the law change dictates plant and equipment purchased after 30 June 2017 for residential premises that was not new would not qualify as depreciable assets. Thus, where a residential rental property is purchased after 30 June 2017, depreciation can only be claimed on new plant and equipment installed after that date, for example, a new dishwasher.
Note, this change only impacted residential premises and did not impact claims for depreciation on plant and equipment for business or commercial premises. Thus, an SMSF purchasing an office or warehouse can still claim depreciation in respect of the remaining written-down value of any plant and equipment that is acquired as part of the
acquisition of that property.
Pension exemption
In general, an expense in respect of a rental property is only deductible to the extent that the taxpayer derives assessable income. As such, if 50 per cent of an SMSF is made up of an accumulation interest and the other 50 per cent consists of a retirement or pension-phase interest, then the fund will generally only be entitled to claim 50 per cent of the amount as a tax deduction. This is because, in this example, the fund is only deriving assessable income to the extent of 50 per cent and exempt income of 50 per cent.
Thus, the overall tax efficiency of a rental property in an SMSF will depend on whether the fund is in pension mode. A greater tax deduction may apply while the fund is in accumulation phase. However, the overall tax efficiency of holding an investment property in an SMSF may be enhanced if the fund is in pension phase, especially if a significant net capital gain is to occur in connection with the disposal of the property.
Naturally expert advice should be sought as to what the most suitable course of action would be in a trustee’s particular set of circumstances.
You should also note if the property is negatively geared, that is, where the deductible expenses exceed the rental income, advice should be sought as to whether it is appropriate to continue with a pension. In most cases exempt income reduces a loss for tax purposes, and since a pension results in exempt income, a tax loss on revenue account would be reduced by the amount of exempt income under Division 26 of the ITAA 1997 . For example, an SMSF that
The range of rules, taxes and compliance tasks needing to be satisfied by an SMSF investing in property today may result in the asset no longer being as attractive as it previously was.
has a negatively geared property and has exempt current pension income would not be maximising its tax losses.
Conclusion
Investing in property appears relatively straightforward and for many will be a relatively low-risk investment for an SMSF. However, as you can see from the above summary, there are many different considerations that need to be taken into account. Moreover, the range of rules, taxes and compliance tasks needing to be satisfied by an SMSF investing in property today may result in the asset no longer being as attractive as it previously was.
Thus, expert advice should be obtained before purchasing an investment property in an SMSF to ensure the tax and related issues are properly considered and no compliance issues arise.
Tracey Besters
Fabian Bussoletti
SUPER EVENTS
SMSF PROFESSIONALS DAY 2025
SMSF Professionals Day 2025, co-hosted by selfmanagedsuper and Accurium, was taken to practitioners in Sydney, Melbourne and Brisbane this year. Around 130 delegates attended at the Sydney event held at the Sydney Masonic Centre.
1: Mark Ellem (Accurium). 2: Jessie Le, Les Mc Millan and Jono Simko (all SMSF Compliance Audits). 3: Dino Micallef and David Goldsmith (both Class).
4: Lauren Ryan (Thinktank) and David Gatt (Vantage Partners). 5: Melanie Dunn (Accurium). 6: Ben Lancaster and Morris Adammo (both ANZ).
7: Dexter Lai and Dane Stephenson (both Accountancy Insurance). 8: Amanda Greig and Leanne Laidler (both Laidler Greig Accounting).
9: Lee-Ann Hayes (Accurium). 10: William Spark and Andrew Spark (both Superfund Property Valuations). 11: Jay Husarek and Katie Lourey (both Gold Bullion Australia) 12: Jason Hurst (Accurium). 13: Peter Quinn and Sarthak Sobti (both The Quinn Group). 14: Melanie Dunn and Mark Hua (both Accurium). 15: Hari Kapila (Om Ganesh) and Jay Husarek (Gold Bullion Australia). 16: Melanie Dunn, Jason Hurst, Lee-Ann Hayes and Mark Ellem (all Accurium).
Like many of us, Megan* never thought it would happen to her – she never imagined she would need to escape a violent relationship; she never imagined her own family would turn their backs on her; she never imagined she and her daughter would become homeless and have to live out of their car.
Right now, there are thousands of Australians like Megan* experiencing homelessness but going unnoticed. Couch surfing, living out of cars, staying in refuges or transitional housing and sleeping rough – they are often not represented in official statistics. In fact, for every person experiencing homelessness you can see, there are 13 more that you can’t see.
Together we can help stop the rise in homelessness.
