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October 2026

WELCOME TO OUR Super Newsletter

Proposed superannuation reforms to strengthen consumer protections: what SMSF trustees need to know

• Allowing the ATO to collect additional information about financial advisers and other entities involved in establishing SMSFs, as well as ongoing advice-fee deduction arrangements.

On 19 August 2026, the Government announced a package of proposed reforms to strengthen consumer protections across the superannuation system, including several measures specifically targeting SMSFs.

The proposals form part of a broader Government focus on making the financial system safer while improving access to financial advice. Many of the SMSF measures remain proposals, and further detail is needed before it is clear how they will operate.

The reforms are intended to reduce the risk of fraud, financial abuse, misconduct and other consumer harm. For SMSF trustees, the proposed changes include: • Mandatory trustee education before an SMSF can be registered, supported by industry-led initiatives to lift standards across the sector. • Giving the ATO additional powers to prevent rollovers to newly established SMSFs while it investigates concerns about fraud, financial abuse, misconduct or potential harm. • Requiring SMSFs to hold uniquely identifiable bank accounts to improve the traceability of superannuation fund monies. • Requiring a written investment strategy when an SMSF is established and consulting on options to improve the quality of investment strategies.

• Aligning the SMSF supervisory levy with fund establishment and increasing it from $259 to $295.

What does this mean for existing SMSF trustees? For existing and prospective trustees, there is no current action required. However, the proposed reforms reinforce encouraged practices, such as keeping clear records, properly separating fund assets from assets of other entities, regularly reviewing the investment strategy and ensuring all trustees understand their responsibilities. We will continue to monitor developments and keep you informed as further guidance becomes available.

Intergenerational wealth report: super has a vital role The 2026 Intergenerational Report provides a picture of how Australia’s economy and finances may change over the next 40 years. For superannuation, the story is one of a maturing system that is expected to play an increasingly important role in funding Australians’ retirement. At the same time, growing super balances raise an interesting question about the role those savings may ultimately play in intergenerational wealth transfer. Superannuation is already the second-largest source

of wealth for Australian households. The report notes that Australia’s superannuation assets have grown from around $148 billion following the introduction of the Superannuation Guarantee in 1992 to around $4.8 trillion today, illustrating how significant super has become to household wealth.

it is no longer sufficient to consider only how assets are invested during retirement. Members should also understand what happens to their super when they die, who may receive it, whether benefits may be paid as a pension or lump sum, and the potential tax consequences for beneficiaries.

The median superannuation balance of Australians aged 65 to 69 increased from approximately $115,000 in 2014 to $204,000 in 2024. Treasury projects that it will approach $450,000 by 2037, as more Australians reach retirement after receiving compulsory superannuation for most of their working lives.

This is particularly important where adult children are intended beneficiaries, as the tax treatment of a superannuation death benefit will depend on whether they qualify as death benefits dependants for tax purposes.

A shift in how retirement is funded This is an important part of the wider intergenerational story. As the population ages, a mature superannuation system can help fund retirement incomes without placing the entire burden of an ageing population on future taxpayers. But the growing pool of superannuation wealth creates another interesting issue that sits alongside Treasury’s retirement income analysis. Treasury found that many Australians die with substantial amounts remaining in super. Among people aged 65 and over who died in 2022–23, the median balance in the year before death was $76,000, while approximately one-quarter had balances exceeding $250,000. That raises an important question: As super balances continue to grow, how much will ultimately be used to fund retirement and how much will form part of the wealth transferred to the next generation? Government policy has increasingly focused on encouraging Australians to use their superannuation savings to support their standard of living in retirement. That policy objective sits comfortably with the purpose of the superannuation system, but it does not remove the reality that, as balances grow, significant amounts of super may still remain when members die. That is where retirement planning begins to intersect with intergenerational wealth and estate planning. What does this mean for SMSF members? For SMSF members, the distinction between retirement planning and estate planning is becoming increasingly difficult to make. As balances grow, decisions about how super is used during retirement can have a significant bearing on what ultimately passes to the next generation.

This brings us to two recent ATO Private Binding Rulings.

When is an adult child a death benefits dependant? Recent ATO rulings provide a reminder Two recent ATO Private Binding Rulings (PBRs) provide contrasting examples of when an adult child may, or may not, qualify as a death benefits dependant for tax purposes. The distinction can be significant. A lump sum superannuation death benefit paid to a death benefits dependant is generally tax-free, whereas tax of 15% plus Medicare may apply to the taxable component of any death benefit paid to a recipient who is considered “nondependant”. A close bond and ongoing care may not be enough In PBR 1052563167137, the beneficiary was the adult child of the deceased. The child had experienced severe medical conditions since childhood, lived in private accommodation with 24-hour support and required specialised assistance for life. The deceased was the sole member of their SMSF, and the lump sum death benefit was paid to the estate to be held for the child’s benefit. Although they lived separately, the parent and child shared a close emotional bond. The deceased spent time with the child weekly or fortnightly, provided emotional and domestic support and personal care, and gave the child several hundred dollars’ worth of gifts each year. Despite this, the ATO concluded that the child was not a death benefits dependant. The relationship was not considered to go beyond a normal family relationship between a parent and an adult child, and there was no evidence of a mutual commitment to a shared life. Accordingly, the requirements for an interdependency relationship were not satisfied.

Younger Australians are finding it increasingly difficult to build wealth through traditional avenues such as home ownership, while older Australians are entering retirement with larger superannuation balances than previous generations. Superannuation therefore has the potential to become an increasingly important part of family wealth transfer, even though its primary purpose remains to provide income in retirement.

The ruling is an important reminder that an adult child’s disability, high care needs or close relationship with a parent does not automatically establish an interdependency relationship. When interdependency is relied upon, all relevant requirements must be satisfied. Consequently, the death benefit was subject to tax.

For families with substantial superannuation savings,

The outcome differed in the second ruling, PBR 1052499031144.

Financial dependency: a different outcome on the facts

In that case, the adult child had lived with the deceased throughout their life and received significant ongoing financial support. The deceased paid expenses including university fees, living costs, food, clothing, medical and dental costs, and private health insurance. Unlike the first ruling, the outcome turned on financial dependency rather than an interdependency relationship. The ATO found that the child relied on the deceased’s substantial, ongoing financial support to maintain their normal standard of living and therefore qualified as a death benefits dependant. Accordingly, the taxable component of the lump sum death benefit was determined to be non-assessable, non-exempt income and was therefore tax-free.

planning discussion. Lastly, a Private Binding Ruling applies only to the taxpayer and specific circumstances addressed in that ruling. Another taxpayer cannot rely on the private ruling, but it does provide indicative guidance of the ATO’s opinion based on the relevant circumstances. If you would like to discuss your estate planning or the potential tax implications for non-dependant beneficiaries, please contact a member of our superannuation team.

Why this matters for SMSF estate planning These rulings demonstrate how fact-specific the treatment of superannuation death benefits can be. An adult child does not become a death benefits dependant merely because they have a disability, receive financial assistance or care from their parents, or live with them. The nature and extent of the relationship and dependency must be considered carefully, and this is considered at the time of death. For SMSF members with significant taxable components who intend to pass their superannuation benefits to adult children, the outcome can have substantial tax consequences and should form part of the broader estate

Peter Camenzuli

Tracey Norris

Partner

p +61 7 3222 8444 e pcamenzuli@pitcherpartners.com.au

p +61 7 3222 8444 e tnorris@pitcherpartners.com.au

Rebecca Nipperess

Jess Donsky

Director

Manager

p +61 7 3222 8444 e rnipperess@pitcherpartners.com.au

p +61 7 3222 8444 e jdonsky@pitcherpartners.com.au

Jo Holland Manager p +61 7 3222 8444 e jholland@pitcherpartners.com.au

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