The Government has announced a package of proposed reforms to strengthen consumer protections in the superannuation and financial systems. The proposals include a range of SMSF measures which may be particularly relevant to clients considering setting up a new SMSF in the future. Although, some of the proposed changes will impact existing SMSFs as well.
A brief outline of the proposals for SMSFs is below:
- The ability for the ATO to prevent rollovers to new SMSFs where there are fraud, financial abuse or other misconduct concerns. Given rollovers are transacted via SuperStream, there may be additional steps to allow for the ATO to review the requested rollover prior to it occurring. This may potentially lead to delays to the rollover from the APRA regulated fund to the SMSF.
- Mandatory trustee education prior to the set-up of a new SMSF. Education is good as it helps ensure that those considering an SMSF have knowledge of their duties and obligations, that is, they “know what they’re getting themselves into”. However, the question is whether such a requirement would be extended to existing trustees or require a refresh, like renewing a driver’s license.
- A requirement for SMSFs to hold a uniquely identifiable bank account. Most SMSFs should already comply with this requirement. It’s a deemed covenant and operating standard. Further, the ATO’s website states that an SMSF needs its own bank account and that “you need to make sure the bank account is unique to the SMSF”.
- Measures to improve the quality of SMSF investment strategies. SMSF trustees must formulate, review regularly and give effect to an investment strategy that has regard to the whole of the circumstances of the fund. This proposed change may require the SMSF trustee(s) to have a written investment strategy at the time of setting up a new SMSF.
- Additional ATO visibility of financial adviser fees charged to new and existing SMSFs.
- The ATO to provide greater visibility to SMSF trustees, in particular those with low balances, of their returns compared to members of APRA regulated funds.
- An increase in the SMSF supervisory levy from $259 per year to $295 per year. The levy has been $259 since the 2014–15 financial year.
It is not clear at this stage as to when these proposals are intended to apply from. We will monitor the situation and provide updates as more information comes to light.
The announced proposed measures also looked at the Compensation Scheme of Last Resort (CSLR). The CSLR is an independent, not‑for‑profit scheme set up after the Hayne Royal Commission to pay limited compensation, up to $150,000, to people who hold an unpaid AFCA determination where the responsible financial firm cannot meet the award, and all other avenues of recovery have been exhausted.
The scheme is funded by levies on parts of the financial services industry and operates only as a ‘last resort’ to help restore consumer trust when regulatory or private remedies have failed.
The CSLR is undergoing a major structural expansion to ensure its long-term viability following recent corporate collapses. For the first time, it is proposed that SMSFs will be brought into the CSLR levy net to help fund the safety net for consumers impacted by financial misconduct.
It is proposed that SMSFs are included as Tier 3 levy payers in the waterfall model in future years when a special levy is required. The total sector levy for SMSFs will be scaled relative to assets under management when compared to the broader superannuation trustees sub-sector, with a flat levy amount applying to all funds. The special levy formula, which currently sets a $100 minimum, will be amended to ensure appropriate treatment of SMSFs. Information currently at hand indicates that the special levy for SMSFs is not expected to exceed $20 per fund in income years when a special levy is required.
A consultation on the application of the waterfall framework for the 2026–27 CSLR special levy (around $170m) has been recently conducted by Treasury. We await the outcome and confirmation of the share allocated to SMSFs.
For further information: