According to an analysis of SMSFs on the AUSIEX platform, about 44% of advised SMSF portfolios were allocated to ETFs in 2025. This compares to self-directed investors' allocation of just 9.3% of a portfolio.

The top holdings of advised SMSFs include multiple ETFs and a range of blue-chip stocks, whereas self-directed investors typically held two listed investment companies and two ETFs, or focused on particular themes, like gold with positions in the likes of Northern Star Resources.

"The role of advisers in actively managing portfolios for risk and return is apparent in the trading patterns on our platform. They are taking advantage of the wide range of listed securities now available to construct whole portfolios - not just buying ordinary shares for clients," AUSIEX national manager, strategic relationships Christopher Hill said.

AUSIEX also said the overall number of SMSF investors using its platform jumped by 20% in 2025.

Flows into fixed income ETFs also rose, up 46.6%. This was almost exclusively driven by the advised segment accounting for 96% of the net value traded. Holdings in subordinated debt and domestic corporate bond ETFs were also up, with AUSIEX saying this was in response to the phasing out of bank hybrids.

Non-advised SMSFs also continue to show more of a home bias, with just 6.4% of their portfolios in global equities compared to 24% for advised investors.

Recent research from the University of Adelaide and SMSF Association found SMSFs underperformed APRA-regulated funds by 1.04% in FY24, noting this tends to be the case in times of strong market performance.

However, over five years to FY24 end, the SMSF sector outperformed APRA funds by 1.1%.

Insights from Adelaide University show that in the five years to 30 June 2024, SMSFs' returns averaged 1.1% higher than APRA-regulated funds.

The top 25% of SMSFs achieved rates of return of at least 13%, compared with just 9.5% for the top 25% of APRA funds, it found. At the same time, the bottom 25% of SMSFs achieved returns of up to just 1.9% compared to 8% for the bottom 25% of APRA funds.

SMSF Association chief executive Peter Burgess said the findings demonstrate the long-term strength and resilience of the SMSF sector; in the 2023-24 financial year, SMSFs underperformed APRA funds by 1.4%, which it said aligns to previous findings they lag APRA funds in times of solid market performance.

"SMSFs remain a compelling option when they are used under the right circumstances and managed effectively," he said.

"For Australians seeking greater flexibility, control over investment decisions, estate planning advantages, and the ability to tailor strategies to their individual circumstances, establishing an SMSF can be a highly effective structure - particularly when supported by specialist professional advice."

While the sector has surpassed $1 trillion in total assets, Burgess stressed SMSFs are not for everyone.

"SMSFs can deliver exceptional outcomes, but without appropriate strategy and guidance, they can also significantly underperform. That variability reinforces why professional advice is so critical for trustees. Trustees who engage professional advisers are better positioned to manage risk, make informed decisions and adapt their strategies as markets and regulations evolve."

"This is particularly relevant given recent instances of unscrupulous operators using high pressure tactics, encouraging individuals to establish an SMSF despite it not necessarily being in their best interest."

Research project lead George Mihaylov said the SMSF sector demonstrated remarkable resilience and strength in FY24, delivering competitive performance and continuing to demonstrate its medium-term value proposition over successive rolling five-year windows.

"The data once again highlights the distinct performance profile of SMSFs. While APRA funds outperform SMSFs at the median, stronger upper-tail outcomes in the SMSF sector often lift average SMSF returns above their institutional counterparts," he said.

"Our data suggest that a majority of SMSFs achieve performance outcomes that are either comparable to, or exceed, the performance of a typical APRA fund. However, we also consistently find a smaller cohort of SMSFs that need help, both in the way they allocate their assets and in terms of their scalability."

The 2026 Chief Executive Award was presented to David Saul, while Bryce Figot received the Chair Award.

High-achieving members in the association's accreditation programs were also celebrated. Ben Harrison was the top achiever for the SMSF Specialist Advisor accreditation course for 2025, while Miriam Kewley was top achiever for the SMSF Specialist Auditor accreditation course for 2025.

SMSFA chief executive Peter Burgess congratulated the winners and said the awards were richly deserved.

"Our SMSF Specialist Advisor and SMSF Specialist Auditor designations are highly regarded across the industry, not only as a measure of technical knowledge but also as evidence of deep SMSF expertise and the ability to apply that knowledge in practice," Burgess said.

"Members who undertake these comprehensive programs understand that earning these designations requires a strong commitment to ongoing professional development, technical excellence and the highest standards of SMSF practice."

Burgess said the Chief Executive Award recognises a member who has made a significant contribution to fostering the SMSF community while embodying the values of the association.

"David Saul plays a key leadership role as chair of the Association's Professional Standards Committee and is a highly respected and active contributor to the NSW local community," Burgess said.

Association chair Scott Hay-Bartlem praised Figot for his influence on the sector.

"Bryce is renowned for his deep technical expertise and his ability to distil complex legal concepts into clear, practical guidance for practitioners. He is widely respected for his integrity, precision, and unwavering commitment to improving best practice within the SMSF profession," Hay-Bartlem said.

In INFO SHEET 274, ASIC provided six recommendations, aiming to give advisers a better understanding of their obligations when advising SMSFs, including the suitability of establishing an SMSF and the types of other professional advice available to their clients.

AFCA senior ombudsman Alexandra Sidoti argues the guidance should better address the understanding of the role of SMSFs, time management, and vulnerability.

She said it is important advisers question clients about why they are establishing an SMSF.

"It's a complex area; there's a lot of technical aspects to being an SMSF trustee and a lot of people don't really understand all the obligations that they're taking on, but it's really important that they do," Sidoti said.

According to ASIC, clients may benefit from advice from various professionals, including an SMSF auditor, accountant or legal professional, but "people are moving into the SMSF space because they want control, and they need to be able to understand what's going on to make informed decisions."

She also stressed that an individual may be well educated in a "completely different field" to finance, law or anything related to the experience required for SMSF. They might also be entering at a point when they are having kids or facing other issues that leave them with insufficient time to manage their SMSF.

Further, although vulnerability is not a pronounced issue in this process, Clack anticipates there will be a lot more focus on coercive control and elder abuse in the years ahead.

"... if there are family members or people in your immediate circle who have malicious intent to get their hands on someone's superannuation, then getting them into an SMSF is going to be a good way to do that," Sidoti said.

"It's something to be mindful of, and I think community-wide, this is something we need to be a little more alive to compared to what we have been in the past."

Financial Standard is the official media partner of the 2026 SMSF Association National Conference.

During a panel discussion, Easy Super director Natalia Clack said she understood that financial advisers cannot provide advice on assets like cryptocurrencies and property due to compliance requirements, but they should be able to educate on those topics rather than shutting down the conversation entirely.

"Financial advisers don't offer these choices, such as cryptocurrencies and properties or many other alternative asset classes. That is why a lot of people come to us and say they want to do it themselves," Clack said.

She also highlighted that most SMSFs are "mature" enough to take responsibility for their own actions when making investment decisions.

"With the right amount of mitigation, everyone should take responsibility for their own financial future; if some people want to invest in a volatile asset class, they should take the responsibility to the full account even if they lose money," she said.

Additionally, many of her clients are young families, and they do not have the flexibility to invest due to their mortgages and savings requirements, but they understand how to tweak their super investments to achieve better returns, further distancing themselves from advisers.

Clack added that the strict compliance framework has diverted many people away from traditional advice and through artificial intelligence (AI), although such sources can be inaccurate and sometimes misleading.

This is shown in the decline in advice engagement over the recent period, as only one in five of the new SMSFs established over the past two financial years were established with financial advice.

Meanwhile, SMSFA chief executive Peter Burgess said he is mindful of some SMSFs being established solely to invest in crypto and similar assets.

According to Class, of the 21,000 SMSFs established between FY23 and FY25, only 725 invested in cryptocurrencies, and 381 invested more than 8% of their SMSF balance in the asset class.

However, in aggregate, it amounts to 0.5% of all assets held in SMSFs.

Burgess said that although only a small portion of money is invested in crypto, SMSFs with lower balances are at higher risk of not achieving returns compared to larger funds, noting that these smaller balances need to achieve "exceptional" returns to accommodate the cost of running an SMSF.

Further, Financial Services Council (FSC) chief executive Blake Briggs said that, despite low engagement, the lack of regulatory oversight of the asset class can result in outcomes like those seen with Shield and First Guardian Master Funds.

"If there are 1000 people investing 100% of their SMSF in crypto, it creates an enormous structural risk, where we might end up with a Shield and First Guardian-styled situation," Briggs said.

Advisers are urged to do better particularly in the area of SMSF establishments in light of ASIC's Report 824 findings, which showed nearly two thirds of SMSFs established under their recommendations are unsuitable to their needs.

SMSF Association chief executive Peter Burgess said it is important to note the 100 files ASIC reviewed was not a random sample and the findings are not representative of the quality of SMSF advice in the market.

At the release of Report 824, Burgess commented that SMSF advice requires appropriate competencies and advisers must have the knowledge, skill and technical competencies to provide this type of advice confidently and responsibly.

Sixty-two files showed the adviser failed to comply with the best interests duty, while some licensees had inadequate pre-vetting procedures to manage conflicts of interest.

"We don't like seeing any cases of inappropriate advice involving self-managed super funds. We hope this report does not turn away licensees and advisers from providing SMSF advice, and we hope they use this they hope they use the practical tips that were in this this review to improve their own processes," he told the annual SMSFA Conference in Adelaide.

In the report, ASIC urged advisers to use professional judgement when determining whether a self-managed super fund is the right option.

"Now, in our view, it is very difficult to use professional judgement if you don't have the competencies to give specialist SMSF advice, and so you don't have the competencies to know when an SMSF is the right option," he said.

Burgess said he was pleased to see ASIC highlight one positive example of an SMSF establishment in the report.

"In this case, the client had several account-based pensions within the SMSF, different taxable and tax-free components while maintaining a single retirement structure. [That] would allow them to manage the tax component of their member balance without the administration complexity and cost that would otherwise apply," he said.

Burgess noted this was a good example of how an adviser established an SMSF based on administration efficiency.

Also speaking at the conference, ASIC senior executive leader Leah Sciacca highlighted one major concern arising from Report 824, which was advisers using the notion of control to justify recommending an SMSF "without exploring what that notion of control meant to the client."

In one case, an adviser set up an SMSF for a client to facilitate investments into an in-house managed account. This is the point where SMSF advice and managed accounts advice intersect under the remit of the regulator.

ASIC previously flagged it is reviewing the managed accounts sector, particularly the growth of separately managed accounts (SMAs), in its 2025-26 Corporate Plan.

While the regulator did not label managed accounts as vertically integrated as such, it is hoping to uncover any conflicts of interests in the wake of more AFSLs creating in-house products.

"When regulators observe significant shifts like this in the market composition and dynamics, we're naturally interested to understand what's driving these changes, what the impacts are, how different incentives might influence these changes, and, most importantly, what it means for consumers," she said.

With the review underway, ASIC is targeting licensees and advisers who recommend or offer managed accounts to clients.

Sciacca warned the regulator also has its eye on advisers who recommended establishing an SMSF to invest in in-house managed accounts without considering the client's circumstances.

"We'll also examine how financial advisers, when they recommend managed accounts, comply with their obligations, including to act in the best interest of the client. SMAs can be very attractive for licencing that all parts of the product manufacturing and distribution value chain," she said.

Financial Standard is the official media partner of the 2026 SMSF Association National Conference.

At the SMSFA National Conference this morning, Meg Heffron, managing director of Heffron Consulting, discussed different scenarios on how the new tax can impact wealthy clients, modelling the implications of either leaving all their money in super or investing outside of it.

Treasury Laws Amendment (Building a Stronger and Fairer Super System) Bill 2026, which was tabled in Parliament last week, proposes to apply a 30% tax rate on earnings from superannuation balances between $3 million and $10 million. For balances over $10 million a 40% tax rate applies. The thresholds will be indexed to the Consumer Price Index each year.

If passed, the new tax will take effect on 1 July 2026, prompting members with large balances to carefully consider their tax, investment and retirement strategies.

For members with more than $10 million in their nest egg, Heffron said there is stronger incentive and urgency to act.

For members with $15 million, for example, they can choose to take out the $5 million this year or in 2027 as a major factor will be what tax rate they can lock in outside super. An ideal scenario would be to lock in a 30% tax rate outside of super.

"Because if I can only get 47% [tax] then, funnily enough, even at $15 million I'm better off leaving it in super and taking it out in a planful way as I prepare for those death benefit taxes," she said.

For members with between $3 million and $10 million in superannuation, Heffron said while Div 296 is "a pain it is not life threatening."

Based on her calculations, leaving money in super works out to be better than taking it out and investing it elsewhere. However, Heffron warned that members in this cohort must plan for this accordingly and do so now.

These members don't need to do anything before 1 July 2026 or before 2027, she said, but when it is time to decide to take money out of super, they should do it in a prudent way.

More broadly, Heffron sees the winding down of super as a three-year process.

In the context of the new tax regime and from her own research, Heffron said what typically happens in year one is getting the balance down before realising capital gains.

In year two, members can take more money out of super and realise assets with low gains. Year three is when the most expensive capital gains occur and the super balance is as low as it can possibly be for the member.

"That three-year process makes sense to me when you're looking to wind down super. The real challenge we've got now is, what [actually happens in year two]? What are the low accrued gains?

"We've got two sums to do now. We've got capital gains for Division 296 tax purposes and capital gains for fund tax purposes, and we are trying to minimise both," she said.

"Selling one asset first might lead to high fund tax, but low Division 296 tax or the other way around. Which one will I pick? [Sometimes] you have to make a choice."

Financial Standard is the official media partner of the 2026 SMSF Association National Conference.

New findings from Class released at the annual SMSF Association National Conference this morning revealed SMSF establishments in the quarter to September 2025 were the highest on record since 2012. This saw the launch of nearly 14,500 new funds, up 33.4% year on year.

The analysis also found four out of five new SMSFs established with Class had no financial adviser behind them. The figures conclude that the share of newly established SMSFs attached to advice is trending downwards.

SMSF Association chief executive Peter Burgess told the opening panel that technology and structural changes are helping drive the spike in establishments.

"I also think it is an illustration that we have an advice framework that is not fit for purpose," he said.

"We know there aren't enough financial advisers out of there giving that advice, and it's costly for advisers to identify that advice. When you put all those things together, it's not surprising that we're seeing so many people go into SMSFs without advice."

Class chief executive Tim Steele said there is a clear opportunity for advice - from an SMSF's establishment and throughout its lifecycle.

"The SMSF sector continues to thrive, gaining momentum among Millennials and Gen X as a key growth opportunity, while also attracting emerging interest from Gen Z and Alpha. This is despite the proposed Division 296 tax implications and a broader industry discussion around super regulation," he said.

There are currently 661,384 active SMSFs - the highest count to date - according to Australian Taxation Office (ATO) data. With more than $1.1 trillion in assets, SMSFs make up nearly one quarter of the total $4.5 trillion superannuation pool.

In the early 2000s, Heffron Consulting managing director Meg Heffron pointed out the "big surge" of financial advisers jumping on the SMSF bandwagon, seeing it as "a great strategic vehicle."

"Now, I think the individuals are driving it. And part of the reasons [is] they've got more money. A 30-year-old has a lot more super than I did at 30," she said.

This is namely from compulsory, high super saving rates and from stronger interest in super.

Heffron believes this generation is more engaged and typically flock to the internet and apps like Copilot to learn more about their super and investments.

Natalia Clack, the founder of SMSF audit and accounting firm Easy Super, said while people do get information from ChatGPT and so forth, they do obtain it from reputable sources.

Clients that come to her business typically have already done their research before setting up an SMSF and "do not wake up one day and decide they want to establish an SMSF."

Clack explained that it is something they "have been thinking about for a few years".

Her clients on average are aged between 35 and 55; they are either single or a couple who are professionals with a young family and a mortgage.

"Unadvised doesn't mean uninformed," Clack said.

"When we talk about advice, we have to understand that there is an advice gap in Australia. If I want to set up an SMSF to invest in property and go to my financial adviser, they cannot advise on the property," she said, noting the same applies for alternative assets.

"What's the point of paying for advice, which is not cheap, when I cannot get advice on the asset class which I want to invest into?"

Class' report found that newly established SMSFs have a higher allocation to direct property at 23.3% compared with 21.1% for existing funds.

Outside this, cash and term deposits account for 35.9% of assets while 10.7% is invested in Australian equities.

Financial Standard is the official media partner of the 2026 SMSF Association National Conference.

AMP made the decision to remove the solution in 2018, as the SMSF lending sector was shifting from traditional banks to non-bank lenders.

SuperEdge, once relaunched, will provide SMSFs trustees, particularly pre-retirees, who want to invest with "greater control and confidence", while maintaining liquidity they need for retirement.

It features a "transparent, well-governed" lending option delivered through brokers, which is supported by a strong credit and compliance framework, AMP said.

The solution also possesses features to manage cash flow and risk - including flexible repayment options and an optional SMSF offset facility.AMP said the lending solution will only be available for SMSFs with a corporate trustee structure and minimum net assets of $300,000, and will offer a maximum loan-to-value-ratio of 80%.

SuperEdge is currently in a pilot testing phase, with broader market availability targeted for Q1 2026.

Commenting, AMP Bank group executive Sean O'Malley explained the return of the solution.

"Australians approaching retirement are balancing two competing pressures - enjoying life today, while making sure they'll have enough for tomorrow. That tension is driving demand for solutions that offer more control, flexibility and confidence," O'Malley said.

"SMSF trustees want to retire on their terms - but without the right structure and support, those decisions can become harder. SuperEdge is designed to provide trustees with a competitive, transparent and responsible lending option as they build long-term wealth.

"As a challenger bank, we're thinking differently about lending - using clearer policy settings and smarter digital checks to deliver a better experience, while staying focused on long-term customer outcomes."

Meanwhile, AMP director of lending and everyday banking Michael Christofides added: "SuperEdge combines practical features, like flexible repayments and an optional offset, with a digital broker experience that helps reduce friction and improve turnaround times."

"We've built in automated SMSF structure checks and document validation to help cut rework - while maintaining strong responsible lending settings."

A total of 37 participants completed the program.

Since its inception, more than 2300 professionals have graduated from the SSA course. Responding to the need for a more guided learning pathway, the SMSF Association recently introduced a cohort-based model featuring six 12-week intakes per year, to keep the course in line with educational frameworks of rigour and relevance, it said.

SMSF Association said the introduction of the structured format is expected to further reinforce the course's standing as the gold standard for SMSF expertise.

SMSF Association chief executive Peter Burgess said the new format is designed to enhance the learning experience without losing the flexibility that professionals have long valued.

"This new model strengthens the support and consistency available to participants, helping them succeed in a busy professional environment," Burgess said.

Cutcher & Neale Accounting and Financial Services client adviser Roshan Roy was amongst the first to complete the new-look accreditation course in 2025.

"Completing the SSA accreditation has significantly strengthened my confidence in delivering high-quality, strategic SMSF advice. It has enhanced my ability to identify risks, opportunities and appropriate structures for clients," Roy said.

"The ongoing access to high-quality CPD programs and technical assistance for SSA specialists also ensures I stay up to date with legislative changes and developments in the SMSF space.

"The SSA designation demonstrates specialist competence in the complex world of SMSFs, giving both my clients and my organisation confidence that the advice provided is technically sound, current, and delivered to a high professional standard."

With the first students now officially graduated, the SMSF Association said early feedback has been overwhelmingly positive.

Of 100 financial advice files investigated, 62 failed to demonstrate compliance with the best interests duty. One quarter of these raised significant concerns about client detriment relating to recommendations to set up an SMSF.

Only 38 files demonstrated compliance with the longstanding obligation for advisers to act in clients' best interests.

For clients that were given improper advice, ASIC concluded that advisers were not basing all judgements on their relevant circumstances. This included "inappropriately using the notion of control to justify recommending SMSFs without exploring what control meant to the clients," Report 824: Review of SMSF establishment advice states.

The advisers also acted more as "order-takers" and did not conduct a reasonable investigation and assessment of financial products. They also did not give priority to the interests of clients where there were conflicts of interest, including in relation to advice to establish an SMSF to acquire off-the-plan properties through limited recourse borrowing arrangements.

ASIC warned licensees that they are ultimately responsible for the advice provided by their financial advisers.

Looking at licensees' policies and procedures, 47 client files that contained records of pre-vetting the SMSF establishment advice, ASIC saw 33 instances where the adviser failed to comply with the best interests duty and related obligations. This included 13 files that also led to significant concerns about client detriment in relation to the advice.

ASIC commissioner Alan Kirkland warned that the next steps involved a consideration of a range of regulatory responses.

"This includes enforcement action where we have significant concerns about client detriment in relation to SMSF establishment advice. We will also request that advice licensees review that advice and, where required, remediate the affected clients," he said.

"Financial advisers and advice licensees should use the findings, examples, action points and risk indicators in this report to improve the quality of their SMSF establishment advice, identify circumstances where an SMSF should not be recommended and detect misconduct."

The report lays out eight action points for advisers and four action points for licensees.

This includes ASIC warning advisers they must not mis-sell an SMSF on the basis of having "control" over the investments and money.

"Where clients have sought and/or are recommended to establish an SMSF on the basis of having greater control, financial advisers should explore what the notion of control means for the clients," ASIC said.

"There are other superannuation vehicles that may offer the desired level of control without the client also taking on the additional responsibilities, and in some cases additional costs, of an SMSF."

The regulator will also be looking to ensure licensees include SMSF suitability factors and additional SMSF considerations within policies and procedures and have effective monitoring and supervision activities particularly in the pre-vetting process.

Kirkland pointed to the collapses of the Shield Master Fund and First Guardian Master Fund as the "worst-case scenario" for switching superannuation funds based on bad advice.

"SMSF trustees should be aware of the associated costs, responsibilities and risks. People who move their super from an APRA-regulated fund to an SMSF also lose important protections, including the benefits of prudential regulation and the ability to make a complaint about the fund or its trustees to AFCA," he added.

In response to the report, SMSF Association chief executive Peter Burgess said the "findings are not representative of the broader quality of SMSF advice currently being provided across the sector."

"The advice files examined situations were, on face value, the establishment of an SMSF appeared to be unsuitable for the client," he said, noting that review was based on a targeted, risk-based sample of advice files.

Burgess criticised the "subjective nature of assessing whether a consumer is, or will be, worse off as a result of the advice provided, particularly when evaluating long-term retirement outcomes."

"Nonetheless, the review highlights that more work is needed to ensure all consumers have access to competent, high-quality advice when making decisions about SMSFs," he said.

The 2025 Annual Benchmark Report by Class found the number of SMSFs reached a record 653,062, with total assets surpassing $1.05 trillion as at June 2025. It jumped 6.4% from the previous year, with 42,000 new funds, the strongest growth since 2017.

Class chief executive Tim Steele said the growth represents the sector's resilience even as the regulatory landscape evolves.

"SMSFs continue to attract a broadening range of Australians who want flexibility, choice, and control in how they save for their retirement," he said.

Data from the report highlighted rising participation from younger Australians as one of the major factors driving SMSF growth. Millennials (30-44) accounted for 37.3% of new establishments, reflecting growing engagement with wealth creation and the flexibility SMSFs offer. The average age of new SMSF joiners was 48 years compared to 61.6 years for existing members.

The average starting balance for new funds dropped from $515,000 to $363,000, showing willingness for members to establish SMSFs earlier in their retirement journey.

"Younger Australians are taking control of their retirement savings like never before...this trend is in stark contrast to the dramatic drop in new fund establishments by Baby Boomers," said Ciara Conway, general manager of super at Stake.

Conway noted that the rising adoption of SMSFs by young people is inherently linked to the popularity of exchange-traded funds (ETFs).

ETFs have grown in popularity with their presence in SMSF portfolios increasing by 1.3% year-on-year, with the younger generation preferring broad exposure to big blue chips at home and abroad.

"These modern, accessible and cost-effective vehicles align perfectly with the preferences of more tech-savvy generations. Together, these two trends are reshaping the Australian superannuation landscape," she said.

The ATO said the growing frequency in accessing super early has forced it to make enforcement in this area a key priority in its 2026 Corporate Plan.

ATO deputy Commissioner for super and employer obligations Emma Rosenzweig said the ATO is continuing to tighten controls around SMSF registration and focusing on education and early intervention.

"We've seen an upward trend in accessing super early and our focus remains on those who illegally access SMSF funds. It's important you don't fall victim to the temptation of illegal early access schemes. The consequences can include additional tax, penalties, loss of retirement savings and disqualification as an SMSF trustee which goes on the public record," she said.

In the 2021-22 financial year, the ATO estimated that SMSF illegal early access came to $250.1 million, sightly decreasing from $256.1 million in the prior financial year.

Another focus area in 2025-26 is outstanding SMSF annual returns, which has significantly grown.

"There is a growing number of SMSFs falling behind in their lodgment obligations, and we know that lodgment is the most important compliance obligations trustees must meet. If you fail to lodge your annual return on time, there may be penalties and interest applied and SMSF tax concessions can be lost," she said.

"If your fund's lodgment is overdue, the Super fund lookup status may change to 'regulation details removed'. This can restrict your SMSF's ability to receive rollovers and employer contributions."

The ATO is also keeping on top of SMSFs failing to respond to ATO commissioner's commutation authorities within 60 days using the correct reporting event and by lodging the transfer balance account report.

"If an SMSF fails to respond to the commutation authority within 60 days of the notice, the member's income stream ceases to be in retirement phase and the SMSF can't claim an earnings tax exemption for this income stream in that income year or any later income years," she said.

"We all play a vital role in safeguarding the retirement savings of millions of Australians. We'll continue to encourage everyone to operate transparently, securely, and in the best interests of members."

Following its initial discussion paper and petition on Division 296, Wilson Asset Management (WAM) has released a second discussion paper, highlighting some of the potential implications from the tax.

The core issue for SMSFs is the taxing of unrealised gains, creating an "enforced shift" in risk appetite, as liquidity becomes a "paramount concern" due to the illiquid nature of small and venture capital investments.

This creates a hurdle for SMSFs holding onto these assets to pay the unrealised gains tax, forcing them to sell other liquid assets, or worse - "attempt a premature and discounted sale of the illiquid holding" just to meet tax obligations.

"This tax introduces what can be described as a perverse 'success penalty'," the paper said.

"The better a small company or start-up investment performs, the larger the unrealised gains, and consequently the greater the tax liability and liquidity pressure for the SMSF holder.

"This would lead to reallocating away from typically volatile small growth companies, where gains are typically unrealised for longer time horizons, and towards more stable, income-generating assets."

SMSFs account for high ownership percentages of start-ups and unlisted companies and this behavioural shift may see the reduction of the $1.1 trillion pool of capital held in SMSFs.

"The potential pool of companies to be impacted requiring external financing (e.g. SMSF) is more realistically 25%," WAM explained.

"Therefore, of the 2,447,295 companies with turnover less than $2.0 million there are approximately 611,823 small companies (2,447,295 * 25%) that would require SMSF funding or personal contributions.

"As personal contributions come from the individual where they would be liable for taxation costs on unrealised gains it is prudent as a cross check to have them captured, as a trade-off decision for a small business owner to invest in superannuation with extra contributions or keep the business afloat."

The report, while showing that adviser influence is growing in new SMSF set-ups, however, indicates that the broader SMSF population still has significant advice needs.

The number of SMSFs using advisers grew from 140,000 in 2023 to 155,000 in 2024.

Despite this growth, most of the sector remains without an adviser.

Vanguard Australia chief of personal investor Renae Smith said although Australia's SMSF sector is continuing to grow, the research for this year's report highlights that there are significant advice gaps for many individuals operating their own super fund.

"Only 24% of SMSFs currently use a financial adviser, which is not ideal when you think of the many complexities associated with managing superannuation including keeping track of changes in rules and regulations, administration, taxes, choosing what to invest in, and then personal considerations such as retirement income needs and estate planning," Smith said.

The research found that advised SMSFs are more likely to report advice gaps around intergenerational wealth transfers (29%) and estate planning (37%), while newly established SMSFs are far more focused on tax minimisation (37%), insurance (26%), and purchasing an investment property (25%). Tax and retirement planning represented the largest cluster of unmet needs, impacting nearly 300,000 SMSFs.

Barriers to advice remain complex, the report said, noting that cost stands out as the primary hurdle for newly established SMSFs.

For advised SMSFs, a lack of holistic advice was increasingly cited.

"On the bright side, the research found that 34% of unadvised SMSFs now plan to seek financial advice, which is up from 25% the year before. But this percentage needs to grow," Smith said.

The latest research also found that many SMSFs are open to receiving digital advice, highlighting the "enormous scope for delivery of scalable, low-touch solutions."

Busoli said assuming the policy is passed into law and commences on July 1, the cap would only be on a per member basis and the additional 15% tax would only be applicable to earnings attributable to balances in excess of $3 million.

"There will be individuals who will achieve a better tax outcome by reducing their super balance to $3 million but they don't need to do it in haste. And there are many who will be best served by making no change at all," Busoli said.

"There is plenty of time to consider what the legislation ultimately becomes before making a decision. Any panic to meet the 30 June 2025 'deadline' is due to confusion regarding the significance of the definition of earnings."

Busoli said only a portion of an SMSF's earning will be taxable, so while there will be a larger tax bill in certain circumstances it will not be as extreme as some think.

Hamilton 21 managing director Richard McDougall said while the tax is controversial, franked dividends may become an efficient way to manage tax inside a large super account.

"Division 296 will apply regardless of how a fund generates returns. That's why franked dividends, while not a shield against the new tax, remain a vital part of managing a fund's total tax burden," McDougall said.

"Franking credits cannot reduce the Division 296 tax itself, but they can eliminate the 15% tax on assessable income for superannuants in accumulation phase - and have an even greater effect in pension phase, where income is not taxed at all."

McDougall said this approach can improve the after-tax efficiency of a portfolio.

"They help preserve capital, particularly in accumulation phase, and generate valuable cash refunds in pension phase. These benefits matter more than ever when a second layer of tax is introduced," he said.

Treasurer Jim Chalmers said that losses incurred on a super balance, before the new tax becomes legislation, would be able to be brought forward.

"They can carry [losses] forward as an important part of the design of what we're talking about... consistent with other elements of the tax system people will be able to carry forward losses," Chalmers confirmed.

When asked whether his government was talking to the Greens about their proposal to lower the threshold for the super tax to $2 million, Chalmers said the were "not considering that".

Webull's SMSF offering has no monthly fees and features commission-free trading on ASX and US-listed exchange-traded funds (ETFs), which it claimed can reduce overall expenses, which, in turn, can help investors improve annual performance.

Webull Securities Australia chief executive Rob Talevski said while lower fees are attractive to SMSF investors, "the usual payoff is a no-frills trading platform."

For this reason, the company built a "full-service suite" that includes institutional-grade cash management, professional trading tools, and live support, alongside features which he said are typically "associated with platforms that charge high monthly fees."

"We believe that Webull offers the ultimate trading and investing portal to house and manage SMSF investors' cash, equity, ETF, warrants and options holdings, allowing investors to log in and get full control over their investments," Talevski said.

SMSFs remain the cheapest segment of the superannuation system, with average fees of 0.65% per annum, according to Rainmaker Information. That compares to 1% for MySuper products and a system-wide average of 0.93%, which continues to decline.

But whether greater control benefits younger investors, typically with lower balances, remains open to question.

In 2019, ASIC cautioned that many Australians were establishing SMSFs that were unsuitable for their circumstances, particularly those with low balances.

ASIC noted a "clear correlation" between SMSF size and member returns, citing a Productivity Commission report that found SMSFs with balances under $500,000 tend to underperform industry and retail funds after expenses and tax.

The SMSF Association, however, which commissioned research from the University of Adelaide, begged to differ. Its research found that SMSFs with a diversified asset allocation see improved investment performance compared to APRA-regulated funds once balances reach $200,000.

Webull said listed shares and cash are the two biggest asset classes for SMSFs in Australia, which has resulted in greater demand for services that support these investments.

Michael Chapman, a director at Mackay Chapman, which led the class action, said the settlement was a "good outcome" for the victims and was achieved efficiently.

The Melbourne-based law firm launched the class action in October 2023 against the SMSF auditors who allegedly failed to pick up that the assets Caddick invested never existed when reviewing the annual financial report.

Among many things missed, auditors did not notice that Caddick's CommSec accounts lacked the right number of digits. Authentic accounts usually have eight digits, while Caddick's accounts had six digits. Another example is that the GST line in those statements often didn't add up.

Chapman told Financial Standard that this is a "fair and reasonable outcome" and an "exceptional" one given the context of the Ponzi scheme that fraudulent financial adviser Caddick ran.

Combining the class action amount and receivership compensation, Chapman said victims have been able to recoup about 50% of their investments.

The class action was settled in the 18-month timeframe, Chapman said, noting that this was particularly pleasing given that class actions tend to take much longer and that many of Caddick's victims are retirees.

Justice Markovic approved the settlement amount overnight. About 50% of the money will go towards the victims while the other half is allocated to the law firm and litigation funder Therium.

The lawsuit was filed against auditors BPR Audit, GK & Co, Bladens Accountants & Tax Agents, Khanh Huynh, and Fin Corp Auditors.

In 2023, liquidators distributed $3 million to Caddick's victims. It is purported that Caddick fleeced investors, family, and friends of more than $23 million.

Burgess said the sector needs to be on alert about the resurgence of "nefarious" activity.

Anti-hawking laws were legislated in 2021 to prohibit unsolicited sales and cold calling, which tend to lead to "poor consumer outcomes".

"Such practices are contrary to what our super sector stands for - a long-term investment approach using a diversified portfolio with the end goal of achieving a dignified and secure retirement," Burgess said.

"In sharp contrast, these schemes typically 'encourage' people to establish an SMSF for the sole purpose of selling an investment product that is often associated with promises of unrealistic returns."

ASIC banned unsolicited cold calling in life and consumer credit insurance sales in January 2020 following the Hayne Royal Commission, intending to "stop practices that lead to poor consumer outcomes and trust in the financial system."

Subsequently, the corporate watchdog also introduced similar legislation to financial products in October 2021, opting to provide consumers greater control in making decisions and prevent them being approached by unwanted products.

Now, the resurgence of the unlawful methodology has been condemned by the SMSFA and goes against financial advisers' Code of Ethics.

"The code imposes certain obligations on financial advisers, including acting in accordance with applicable laws, acting in clients' best interests and not advising where there is a conflict of interest or duty," Burgess said.

"In addition, all advice and recommendations must consider the broad effects arising from the advice, and must be offered in good faith, competently and must not be misleading or deceptive."

Burgess warns that SMSFs are not for everyone and are a vehicle that needs to be rigorously explored with professionals.

"Deciding to set up an SMSF and take direct responsibility for your superannuation is a major financial decision that should never be taken lightly," he added.

"As the association has always maintained, SMSFs are not for everyone, so the input of an SMSF specialist before embarking on this journey is critical."

The 2024 CEO Award was posthumously awarded to former Foxton Financial director Brooke Hepburn-Rogers while Heffron director Leigh Mansell was awarded the prestigious Chair Award.

Heffron national relationship manager Michael Lorimer was recognised for achieving the highest examination score in 2024 for the SMSF Specialist Advisor accreditation program, and Ryan Ding, senior SMSF audit manager from Aquila Super, was recognised for achieving the highest examination score for the SMSF Specialist Auditor accreditation program.

SMSFA chief executive Peter Burgess said its members are highly regarded across the industry, and all award winners were "richly deserved".

"Those members who have undertaken the comprehensive Specialist Adviser and Specialist Auditor programs understand that earning these designations requires a commitment to professional development, technical proficiency and the highest standards of SMSF practice," Burgess said.

Commenting on 2024 CEO Award, Burgess believes there is "no one better" than Hepburn-Rogers to receive the recognition.

"No one better fits that description than Brooke, the founder and director of the ACT-based Foxton Financial, who had more than 22 years' experience in the sector..., and always a strong advocate of our association," Burgess said.

"Sadly, Brooke passed away last year, so this award is a poignant reminder and tribute to her unwavering support and dedication to the sector over many years."

Meanwhile, SMSFA chair Scott Hay-Bartlem described Mansell as a "worthy recipient" and commended her contribution in various sectors of SMSF.

"This award recognises a member who has made an outstanding contribution to the growth and sustainability of the SMSF sector, and no one better symbolises this description than Leigh who has been a major contributor via her exceptional education skills," Hay-Bartlem said.

"In addition to her contributions to education, Leigh's leadership and insights during the 2024 Treasury legacy pension amnesty consultations were instrumental.

"Her influence played a key role in shaping a legislative outcome that will benefit many SMSF members."

The number of newly established SMSF trading accounts on the AUSIEX platform - across both advised and self-directed segments - rose 14.5% year-on-year in number.

Advised SMSFs drove most of this new account growth rising 12.3% year-on-year in overall account number. There was also a rebound in new self-directed SMSFs trading accounts from the prior year, up 19.8%.

"We've seen advised SMSF accounts grow in number last year and continue to grow at the start of this year - and trading more actively," AUSIEX head of product, customer experience and marketing Brett Grant said.

After a surge in interest in SMSFs among younger generations during COVID-19, Baby Boomers returned to make up a stronger proportion of new SMSF accounts, Grant said.

Baby Boomers accounted for over 50% of new SMSFs accounts, both advised and self-directed.

There was also an increase from Millennial SMSF investors, up 9.8% year-on-year. The report found this was mostly driven by male millennials. By contrast, there was a year-on-year decline in new Generation X female SMSF accounts.

On the self-directed side, Generation X increased its share of new accounts year-on-year, up to over 31%.

SMSFs traded more in 2024 than they did the previous year, up 7.5% (by number of trades), the report found.

"The increase we believe was in part due to increased additional interest in global equities, in particular global equity and US equity exchange-traded funds (ETFs)," Grant said.

The value of holdings also increased more for advised SMSFs than for non-advised SMSF accounts.

"These gains appear to have been supported significantly more diversified holdings, across sectors and securities," Grant said.

"This includes an increasing allocation to ETFs - which is a stark difference to non-SMSF accounts and self-directed SMSF accounts which prefer direct equities.

"Despite concerns about the future of the wholesale investor test, the potential Division 296 superannuation tax, compliance requirements and cost of advice concerns, SMSFs remain in favour with distinct groups of investors and advisers who value greater flexibility when it comes to growing and protecting wealth."

The total value of the net assets administered on Class grew by 9.2% to $355.9 billion across 184,830 SMSFs throughout the period.

Despite a slight decline from 52.6% to 51.9%, Generation X, born between 1965 and 1980, remains the largest cohort in establishing a fund - while Baby Boomers experienced a sharper drop from 17.5% to 13.4%.

Millennials, born between 1981 and 1996, contributed 33.6% in the six months - a 5% surge - as Class chief executive Tim Steele said the group "grew at a faster rate than any other demographics".

He also added that there is a "growth opportunity" for advice in the growing SMSFs landscape, which surpassed $1 trillion in total assets in November 2024, equating to more than 25% of the $4.08 trillion super industry.

"We undertook an analysis of data from Class SMSFs for the first half of FY25 which pleasingly shows the sector continues to grow and maintain its resilience," he said.

"Data from the Class Benchmark Report has indicated that 70% of SMSFs are unadvised as the gap between supply and demand for financial advice continues to grow.

"We also know the number of trustees accessing financial advice has stayed relatively stable over the past three years."

He believes those financial professionals that are providing "innovative" solutions could benefit from those who are not advised.

The sentiment is supported by Stake chief executive Jon Howie, who said reducing the complexity of SMSFs will invite more new generations to "take charge" of their super.

The report follows the SMSF Association's recent study, revealing that SMSFs generally outperform industry funds over a longer period.

The study also demonstrated advised SMSF trustees tend to outperform their non-advised counterparts by 7.6% compared to 6.4% in the median rate of return.

"The research found financial advisers play an important role in bolstering SMSF returns and helping trustees to avoid investment mistakes," SMSFA chief executive Peter Burgess noted of the findings.

EDITOR'S NOTE:  The original version of this article stated incorrect figures on the establishment rate for each cohort based on the Class report supplied.

Plans for the review were first announced in ASIC's Corporate Plan 2024-25 and the regulator has now confirmed two streams of work are now underway.

"We will focus on why some consumers are advised to set up an SMSF, even though an SMSF may not be suitable for them and may adversely affect their retirement outcomes," ASIC said.

The last review in thematic SMSF advice was released in June 2018, and ASIC said this project follows on from what it gathered from that report.

ASIC said there are two main streams of work underway concurrently. These involved reviewing client advice files where SMSF establishment advice has been provided. ASIC said it will assess compliance with the best interest duty and related obligations.

In addition, ASIC is observing the role of AFS licensees in monitoring and supervising representatives who are providing SMSF establishment advice.

ASIC said this includes considering information obtained from licensees about their oversight and the application of their policies and procedures in the context of providing SMSF establishment advice.

"At the conclusion of our project, we expect to release public messages about our findings. Where appropriate, we will take enforcement or other regulatory action against misconduct," ASIC said.

Meantime, ASIC addressed concerns over how advisers and licensees are prepared for the use of artificial intelligence.

ASIC's recent report into the use of AI noted a rapid acceleration in the volume of AI use cases and a shift towards more complex and opaque types of AI such as generative AI.

The regulator said licensees expressed they were planning to increase their use of AI.

"We are concerned that not all licensees are well-positioned to manage the challenges of their expanding AI use. Changes in governance and risk management arrangements are slow; it is therefore likely that any gap between AI use and AI governance arrangements will widen as AI adoption increases. This could leave licensees unprepared to respond quickly but safely to innovations from competitors," ASIC said.

"ASIC is urging financial services licensees to ensure their governance practices keep pace with their accelerating adoption of AI."

According to research from the University of Adelaide's International Centre for Financial Services (ICFS), commissioned by the SMSF Association (SMSFA), the five-year annualised rate of return (ROR) on SMSFs between 1 July 2018 and 30 July 2023 was 6.5% compared with 5.3% for APRA funds over the same period.

In FY23, the top quartile SMSFs (11.6%) outperformed APRA funds (9.3%), while the bottom quartile of SMSFs underperformed, achieving maximum RORs of only 1.6% versus 8% for the lowest APRA fund quartile.

University of Adelaide senior lecturer in finance George Mihaylov, who led the research, said the difference between small and large SMSFs have consistently been a common theme throughout the research.

In FY23, Mihaylov said noted a significant difference in the performance of the two cohorts with large SMSFs generating a 7% median ROR compared with just 0.4% median ROR for smaller SMSFs.

However, the entire SMSF sector is performing greater over a longer term in aggregate.

"APRA funds outperformed the SMSF sector in 2022-23 continuing the interchanging pattern we've observed previously, where APRA funds outperform in some years while the SMSF sector outperforms in others," Mihaylov added.

"While this home bias generally leads to sub-optimal levels of investment diversification, it can also act to dampen earnings and returns during periods where the domestic stock market underperforms international markets - precisely what happened in 2022/23 relative to some international markets."

Additionally, the research also suggested that advised SMSFs (7.6%) tended to outperform non-advised funds (6.4%) in the same period.

"The results indicate that SMSF trustees who received financial advice are associated with funds that reported materially higher investment returns in 2022-23," Mihaylov continued.

SMSFA chief executive Peter Burgess said the data displays the "aspirational benefits" of the sector and highlights the important role professional advice play in assisting SMSF trustees to diversify their investment portfolio.

The study gathered data from 421,000 SMSFs - 69% of all SMSFs - provided by BGL Corporate Solutions, Class, and SuperMate.

The research also comes as SMSFs surpassed the $1 trillion milestone in November last year, where Burgess said SMSFs offers more control and flexibility that encourage more engagement.

"This extra flexibility and control can manifest itself in many ways including investment flexibility, estate planning flexibility and the ability to structure the fund in a way which best suits the needs of fund members," Burgess said.

SMSFA chief executive Peter Burgess said the extensive consultation Chalmers has claimed happened was not genuine engagement but a procedural formality.

"It started with a fixed proposal to tax unrealised gains and not index the cap, and there was no deviation from these positions - despite compelling evidence of its potential deleterious impact on the wider economy," Burgess said.

"The absence of significant adjustments or receptivity to alternative views indicates that the consultation was merely a process to endorse a pre-decided policy position instead of a genuine effort to consider other views."

The issues were addressed extensively by SMSFA and various MPs including Teal independent Kylea Tink. However, amendments were shot down when it passed the lower house in October last year; it currently remains before the Senate and could be postponed to until after the federal election.

Burgess has previously pointed out the Bill will likely not pass the Senate crossbench, but claimed the government is confident and remained skeptical as he urged the Senate not to proceed with it.

Meanwhile, Burgess accused Chalmers of "playing hard and fast with truth" when he mentioned there were other parts of the superannuation system where unrealised gains are calculated.

"In some parts of the superannuation system deemed income rates are applied which differ fundamentally from taxing unrealised capital gains," Burgess explained.

"By drawing a parallel between these distinct approaches, the statement confuses the public about prevailing financial practices within the system and how capital gains are conventionally treated and taxed, thus undermining trust in the system's fairness and transparency."

Further, Burgess was also dissatisfied with the Treasurer's claim that, by law, self-managed super funds (SMSFs) are to maintain liquidity to meet their tax obligations.

"While it is standard for laws to require liquidity to meet existing tax liabilities, the new policy introduces a liquidity demand far beyond what anyone could anticipate or plan for," Burgess continued.

"By imposing taxes on unrealised gains, the policy compels asset holders to ensure liquidity levels that might necessitate the premature sale of assets - a requirement out of step with traditional practices where taxes are only imposed upon the realisation of a capital gain.

"The abrupt and severe nature of these demands can disrupt financial planning across various sectors, placing undue strain on individuals and businesses unprepared for such drastic measures."

The total SMSF members grew to 1,173,867 in over 630,000 SMSFs, with over 10,200 new entrants in the quarter and 165 exits. Sticking with tradition, the vast majority of SMSFs have two members at close to 70%.

Residents in New South Wales and Victoria remain most likely to have an SMSF, together making up more than 60% of the total.

Together, they have more than $1 trillion in retirement savings, the bulk of which is invested in listed shares. This is followed by cash and term deposits and non-residential properties.

The average assets per SMSF sits at $1.55 million while the median is about $877,500.

SMSF Association chief executive Peter Burgess said while the figures are estimates, they underscore the confidence Australians place in SMSFs. He believes it is a powerful testament of the value of "choice" and the benefits of SMSFs."

"SMSFs can provide the ultimate level of control and flexibility which in-turn empowers and encourages greater level of engagement," Burgess said.

"This extra flexibility and control can manifest itself in many ways including investment flexibility, estate planning flexibility and the ability to structure the fund in a way which best suits the needs of fund members."

He has however highlighted that SMSFs are not designed for everyone.

"[it is] for those individuals who want to take direct control of their retirement savings, whether in the accumulation or decumulation phase of superannuation, they have proved a very effective vehicle," he added.

"Over nearly four decades we have seen the emergence of a dedicated cohort of advisers who have played a critical role in guiding SMSF members through their own unique superannuation journey.

"The fact that every inquiry into superannuation has given our sector a clean bill of health is testimony to the professionalism they bring when advising their clients."

The new stats come amid the looming superannuation tax, which will impose an extra 15% tax for any super balance that tops over $3 million when it comes into effect.

The proposal, passed the lower house last month, was on its way to the Senate only to be reported that it could be shelved until after the next federal election.

"It appears the government has come to the realisation that they don't have the support of the Senate cross bench to get this bill through, and they now have other priorities," Burgess said.

The 2024 Annual Benchmark Report dives into potential tax liability for Class members if the legislation passes, which could incur an additional tax of over $825 million collectively for its 16,531 high-balance members.

Class said 36% of its members holding direct property assets will "find It difficult to meet additional tax obligations on these illiquid assets."

Tim Steele, chief executive at Class, said small business owners and farmers could be the biggest losers under Division 296.

"Our research shows the proposed tax could significantly challenge Class SMSFs with high balances, with Class members facing on average just under $50,000 in additional tax liability," he said.

"This could particularly impact the 36% of affected SMSFs that hold direct property, making it challenging to manage tax obligations given the illiquid nature of these assets.

"For example, many small business owners and farmers could lose the incentive to transfer real business properties into SMSFs, making such strategies financially unviable. They may also find themselves with an even bigger tax bill with insufficient cash reserves to pay it."

Despite growing concern, the number of SMSF established in FY24 has skyrocketed, representing 5.2% of the total SMSF number of 625,609.

The number of wind-ups of SMSF accounts have also dropped significantly, only seeing 1197 accounts shutting down in FY24 (missing Q4 data), comparing to 12,436 in the previous year.

Steele said the trend could prove opportunistic for advisers.

"While advice accessibility is a challenge, improving productivity for financial professionals through ongoing investment in technology presents a significant opportunity," Steele said.

"We're also encouraged by the proposed legislative reforms which aim to improve access to financial advice."

Additionally, the study revealed members aged 75 and over are now the biggest cohort of SMSF members, increasing 1.2% in FY24 and 4.35% across the past five years.

Class said this is a result of the age group creating their funds at a young age and maintaining them into their retirement. Further, ATO data shows around 65% of all SMSFs have existed for more than a decade.

According to the Investment Trends 2024 SMSF Adviser and Accountant Report, there has been a significant increase in revenue from SMSF clients year-on-year, consolidating the market's sentiment in engaging the particular service.

To accommodate the broader client mix, SMSF specialists have applied an increase on fees, with accountants that are "classified with best practice" increasing their rate over the past three years.

Guiamatsia also signified an increase on property investment interests and longevity protection as a "bigger part" of the SMSF advisory package.

She did however raise a crucial struggle for SMSF trustees, advisers and accountants, stating that the ongoing changes to ATO processes have proven to be relatively challenging.

"Compliance with the ATO's event-based reporting is emerging as a new challenge, cited as the number one reason for windups and mentioned by a growing chorus of advisers and accountants as well," Guiamatsia said.

Administration and compliance issues have compiled ahead of client's investment selection, which has recently been more independent from the increasing activity of internet research and conversations in the decision to set up SMSFs, resulting in a declining engagement rate with investment advisers - particularly in the areas of pension strategies and estate planning - to a "record low" showcased in the 2024 Vanguard/Investment Trends SMSF Investor Report.

Complying to the ATO's technological compliance as well as continuation of proactive engagement are seemingly the top priorities for 'best practicing' SMSF accountants.

The number of SMSFs without advisers is at an all-time high of 475,000. Adviser use has dropped to an all-time low of 140,000 in 2024, down from 160,000 in 2023 and 205,000 in 2019.This decline comes at a time when the number of SMSFs without advisers and with unmet advice needs is peaking.

Only 25% of trustees without advisers are likely or very likely to seek financial advice in the future.

The top three reasons people don't seek advice are that they feel they can manage their own finances, they think advisers are too expensive, or they don't need advice right now. A bad experience with an adviser in the past is also a common reason.

Most established SMSFs get advice from accountants, while newly established SMSFs prefer advice from SMSF administrators.

Both groups, those with and without advisers, say they need help with tax and retirement strategies. They want advice on SMSF pension strategies, inheritance and estate planning, tax planning, and changes in regulations.

"These findings continue to signal the opportunities that financial advisers have in delivering advice that is suited to the needs of SMSF trustees," said Vanguard Australia chief of personal investor Renae Smith.

"It's been a longstanding view of Vanguard's that advice can help investors achieve better outcomes.

"When it comes to pension strategies, estate planning or keeping trustees well-informed about regulatory changes, who better than a financial adviser to provide guidance around these topics?"

Reflecting the growing digital world, SMSFs with unmet advice needs are increasingly expressing an interest in digital advice or digital tools with the assistance of a human adviser. The top three areas of interest are SMSF contribution strategies, investing for a regular income, and ETFs.

Conversely, the advised SMSF cohort are more likely to use digital tools when it comes to buying an investment property or investing for a regular income.

The SMSFA is calling for an amnesty for legacy pensions in the upcoming federal budget as current draft regulations proposing to increase the 15% tax to 30% on super balances above $3 million (Division 296 tax) are not clear on how they must be valued.

"The confusion stems from the fact these types of pensions do not have a family law split value, meaning under the draft regulations it will require a different set of valuation factors to be used rather than the default law split factors, that appeared to be the intent of the regulations," SMSFA chief executive Peter Burgess said.

Treasury has confirmed, Burgess said, that the intent is for a self-managed super fund (SMSF) paying a complying lifetime or life expectancy pension to use the Family Law Split factors in the relevant Schedule of the Family Law (Superannuation) Regulations 2001 to value the pension for Division 296 purposes.

The draft regulation must also clarify who will be responsible for calculating the value of legacy pensions.

"Considering the ATO doesn't have the required information, we assume the funds themselves will be asked to do this calculation and report the value in their annual return. Compounding this difficulty is the relatively small and declining number of these pensions, meaning it's unlikely SMSF administration platforms will undertake this calculation," he said.

Many legacy pensions cost a substantial amount to administer. With Division 296 tax looming, costs are tipped to increase.

Consequently, the SMSFA is urging Treasury to fast track the legacy pension amnesty as first announced in the 2021 budget in this year's budget.

"There is a window of opportunity now to significantly reduce the number of these pensions before the proposed new tax commences on 1 July 2025," Burgess said.

Further, Division 296 will likely make the rules around reserves associated with legacy pensions even more convoluted.

"Division 296 is about to make the valuation of pension reserves and allocations to members a whole lot more complex and we are calling on the Government to adopt a wholistic approach in managing reserves, that avoids non sensical tax stacking," he said.

"An amnesty will help reduce the remaining number of these legacy pensions by giving individuals the opportunity to take up new more innovative account-based retirement income products. This in turn will make the administration of Division 296 a whole lot simpler and efficient for taxpayers, regulators, and the superannuation industry."

A new update to its intelliflo office software includes detailed cashflow inputs, projections, and outputs within its cashflow modelling for clients SMSFs, or who are considering establishing one.

Advisers can now create and test scenarios to create a model of an SMSF and illustrate what outcomes can be achieved with an SMSF, intelliflo said.

It said this is the first in a planned series of updates to the software.

"SMSFs can include a variety of inputs - including properties, physical assets, investments, liabilities, and expenses - all of which can now be included in detailed projections and better personalised advice for clients by advisers taking a deeper dive into SMSFs and conducting 'cashflow within cashflow' reviews," intelliflo product strategy lead Stephen Wirth said.

"Supporting advisers who are managing clients with more sophisticated multi-entity advice needs is a priority for us, to help our customers ensure the overall end-to-end advice journey from client onboarding to advice presentation is integrated, intuitive, and innovative."

The update follows the recent addition of two-way sharing of data between intelliflo and its partners Product Rex and Omnium.

"Research data is sent back into the advice journey providing a complete audit trail and basis for recommendations, and data will now be available as outputs within intelliflo's document designer module and any subsequent advice documentation - significantly reducing data entry time," intelliflo said.

AFCA senior ombudsman Alex Sidoti used a case study at the recent AFCA Member Forum to highlight a grey area that advisers can overlook after one AFCA complainant, who was the corporate trustee of an SMSF, engaged an advice firm to provide advice and broking services.

The complainant argued that the SMSF receiving the advice was a retail investor as it had less than $10 million in assets and therefore entitled to the protections of the best interest duty.

The complainant also argued that personal financial advice was provided and that the advice was inappropriate.

"The financial firm on the other hand, said that the SMSF was a wholesale client. It also said it only provided general advice and that the trustee was responsible for all investment decisions," Sidoti said.

This is on top of the financial adviser relying on wholesale certificates provided by the complainant's accountant, which stated the trustee had more than $2.5 million in assets or had otherwise met the income test of earning $250,000 for two consecutive years. This is regulated by section 761(G) s7 of the Corporations Act.

"The complainant, on the other hand, said that was the incorrect test to apply and for that reason the financial firm couldn't rely on those certificates. It said because the financial service that was provided was about how a superannuation fund should invest, the correct test to apply was the SMSF holding $10 million in assets," she said. This test sits in section 761(G) s6 of the Corporations Act.

ASIC pointed out the confusion a few years ago when it published guidance QFS150, which indicated that the $10 million test is the most appropriate one to apply in this scenario.

"Basically, if you're providing advice on how an SMSF should invest, that SMSF needed to have $10 million in it in order for it to be properly treated as wholesale," she said.

In August 2014, ASIC brought this down a notch.

"[ASIC] didn't say that it was wrong, but it did say that there was legal uncertainty in the area and that it wasn't going to be taking legal action itself to enforce that," she said.

"ASIC did note however, that that didn't eliminate legal risks for financial firms who could still face private actions on this point. We have in the past received complaints at AFCA which are specifically on this point, and this was one such matter."

AFCA ultimately found that the complainant was provided general advice and not entitled to compensation.

In the determination, the ombudsman "considered whether the general advice had otherwise been provided appropriately with reasonable care and skill, and efficiently, honestly and fairly" and found that it had, so the complainant wasn't entitled to compensation on that basis.

"That said, watch this space. We do have upcoming determinations that are likely to address this issue. So, it was inevitable that AFCA at some point would receive a complaint where the correct wholesale test is directly relevant to the outcome of the complaint," she said.

Furthermore, one critical question for advisers is: When does a financial service relate to a superannuation product?

If an adviser provides advice on how an SMSF invests its funds or a service that relates to how an SMSF invests its funds, does that then become a financial service that relates to a superannuation product - being the SMSF? Does that also mean that the $10 million assets test applies rather than the general test?

"This doesn't preclude consideration of whether a client might be a sophisticated investor, which is under 761GA. It's a different test that applies. That, rather than looking at assets and income, is really looking at this level of sophistication and financial nous and understanding of that particular client," Sidoti said.

"One strong reminder I would give is if you intend to rely on that particular section, it is very prescriptive about the steps that a financial firm needs to take, which includes things like actually setting out in writing why you've assessed this particular client as being sophisticated and the degree of understanding that they have of the financial product and the risks involved and other things of that nature."

Meezan Wealth Management founding director Rokibul Islam said the solution, which is called Al-Mustaqbal Islamic SMSF, had been well received by Islamic professionals and he expected strong interest from skilled migrants and Islamic family members who wanted to pool funds in an SMSF to buy property.

Meezan also provides an Islamic superannuation fund which invests in a Sharia-compliant way.

Islam said members of the Islamic community in Australia overwhelmingly preferred to invest in property over any other asset class because of its physical nature and history of steadily increasing value. However, borrowing money to buy property and paying interest was forbidden (riba) under Islamic finance (Sharia) principles.

With the Islamic SMSF structure, Meezan Finance provides funding which followed Islamic Musharaka principles. Money borrowed to buy the property, which was placed in an SMSF, was repaid as rent and dividends rather than interest.

The SMSF initiative follows Meezan's launch of a low-cost digital investing solution for the wider Australian Muslim community last year that also includes providing access to Islamic pensions, financial advice and retirement and estate planning.

Islam said the Islamic SMSF worked on several different levels. Firstly, because buying property in Australia, particularly in Sydney was expensive, many Australian Muslims struggled to come up with the needed 20% deposit.  Because a single SMSF can have up to six members, family and friends could pool their money to get a Sharia compliant loan and buy an investment property held in an SMSF which they jointly control.

"The amount people can borrow is not determined by their income but rather by the size of the regular employer compulsory and voluntary personal contributions to the SMSF," Islam said.

"Rent from the property would be taxed at a flat 15% rather than higher personal income or company tax rates and when the property is eventually sold for a greatly increased price it will be tax free as it will be free of capital gains tax.

"It is a religious, ethical and tax efficient win-win-win solution for Australian Muslims that was not available before."

Commenting on the future of farming property at the SMSF Association Conference, Timms said market research has shown that primary producers have a higher impact from this tax than others, due to a variety of factors such as variances in market values, impact on cash flow and lack of alignment between market movement and lease yields.

"There's been a lot of chatter about Div 296 and this impact it will have on farmers, but it's actually an area where farmers are going to be impacted more than they should be, and advisers need to be aware of this," Timms said.

"Recent rapid increase in land values have seen members that previously wouldn't have been impacted face risks of this tax in the future."

The federal government intends to reduce the concessions available to individuals with superannuation balances that exceed $3 million with its proposed Division 296 Tax.

Already, Timms said SMSFs holding farmland property are considering the best options to either transfer the land or restructure investments to factor in a tax that may require payment in years of low cash flow.

"This is not an asset that farmers are generally holding to make a capital gain on down the track - it's something that is quite often passed to the next generation," Timms said.

"Therefore, they don't generate the same income as another asset just because the market value goes up."

Timms added: "It's great if a farmer can sell the asset and crystallise that capital gain, but not if they want it to go to the next generation. So, it is going to have a significant impact on farmers."

Many farmers feel personally attacked by the tax.

"They feel like this is an attack on the farmer- they're already pretty pissed off by a lot of things, and this one is not helping," she said.

For SMSF advisers with farming clients, Timms said it is important to understand the nuances of Division 296 Tax, alongside property law, trust law, GST, and varying tax rules specific to farmland.

"This, accompanied with the ability to manage family conflict and complex succession matters," she said.

Also presenting at the SMSF Association Conference, shadow treasurer Angus Taylor slammed the proposed doubling of superannuation tax to 30%, saying it is a blatant attack on Australians' wealth.

Presenting at the SMSF Association National Conference, Heffron Consulting managing director Meg Heffron called on SMSF professionals to put some perspective around the proposed new tax and anticipate some critical questions they will be fielding from clients.

When it comes to income earned in super, Heffron said "we are still better [off] in super even with Division 296."

But in terms of capital growth, what members will "hate about Div 296" is the taxation of unrealised gains. If an asset is increasing in value, Division 296 will bring forward the taxation point.

"All of the [asset's] growth is eventually going to get taxed when you sell the asset, but Div 296 is making you pay tax on that growth as it as it happens, and not giving you a discount. So that's definitely bad. But at the time of sale, it's profoundly better to make a realised capital gain in super," she said.

Another issue SMSFs must bear in mind is that Division 296 targets future gains from 30 June 2025.

"The gains we're making now are never captured by Div 296 as long as we get valuations right at 30 June 2025," she said.

Division 296, she emphasised, will make members pay tax on the gains built up is when selling the asset.

Half of the 5000 SMSFs attached to 8000 members in Heffron's client base are below 65 years old and have not reached the $3 million mark and some many never do so.

Younger members from 40- to 60-years-old who are likely to hit $3 million currently wonder if they should keep putting money into super.

"If they do [get to $3 million] and they've done it by making lots of extra concessional contributions or non-concessional contributions, might they regret that later because Division 296 Tax makes that so wildly attractive?" she asked.

While not all SMSFs will necessarily save $3 million or more, they are nonetheless aspiring to maximise their retirement savings, Heffron said.

For that group, $3 million feels like a lot of money right now, but this is an unindexed cap and this cohort has decades of working and saving left, she pointed out.

A 35-year-old today, for example, is dealing in a different world of contribution caps to a 65-year-old as contribution caps are much lower and there are now limits on non-concessional contributions.

While it is assumed that $3 million will never be indexed, Heffron strikes this as unlikely.

"[Even] quite modest changes [and] modest indexation actually makes a profound difference to someone in this position, given how constrained younger people are from putting money into super these days," she said.

Providing a legislative and technical update at the SMSFA National Conference this morning, chief executive Peter Burgess said the association has run the numbers and it doesn't believe it can succeed in having the "completely unnecessary" reform scrapped.

He said the association has had productive conversations with certain Teal independents who had been "very supportive and sympathetic" to its advocacy efforts in opposing the Treasury Laws Amendment (Better Targeted Superannuation Concessions and Other Measures) Bill. The Bill, introduced into parliament last year, imposes a tax rate of 15% for superannuation earnings corresponding to the percentage of an individual's superannuation balance that exceeds $3 million for an income year.

"The reason we think it is unnecessary is because it addresses a legacy issue, and being a legacy issue, it should fix itself in the not-too-distant future. All this Bill is going to do is make the system even more complex," he said.

"[However] we've spoken to members of the Senate crossbench, and it's clear to us that we just don't have the numbers."

He said some members of the Senate crossbench told the association they wouldn't normally reject government views, explaining they instead propose amendments to improve the Bill.

"Having said that, we are aware, having spoken to [Teal senator] Kylea Tink, that they will be passing an amendment in the house to bring in indexation," he said.

Providing input as to the amendment, the association has proposed it be linked to the consumer price index (CPI).

"Of course, there are lots of different ways that you could index this CPI, but we've chosen that method because it's consistent with the way other caps are indexed in the super system," Burgess said.

Addressing the crowd at the SMSF Association Conference in Brisbane, Hurley cited new research by Class, which found that Gen X and Millenials represent 74.6% of all new SMSF establishments. What's more, women in the age bracket 35-44 are the biggest movers.

She said the research suggests younger generations are seeking greater control over their retirement savings. However, she said there remains considerable roadblocks for many who may otherwise wish to establish an SMSF.

"One of the big detractors for young people considering an SMSF is fear of legislative change and government intervention," she said.

"So, advisers working to educate and help alleviate some of those concerns should work out strategies for using a combination of wealth building vehicles, which might incorporate not only an SMSF or an industry fund, it might also incorporate trusts and other vehicles as well."

Hurley added that all advisers should be thinking about how to better access information for the younger generation so that their retirement roadmap is a more holistic view of their entire portfolio of wealth.

"It's really about having a look at the ideas of potentially aiming for a retirement roadmap that aims to have half of a person's wealth outside of super, and half inside, and having a fairly balanced approach to that," she said.

"Looking at how the members are looking to generate various income streams for themselves to help them maximise their ability to make contributions over time. These are the things that are really great."

Younger generations also respond very well to "set and forget" habits, she said, and love gamification.

"They live technology-driven savings where they don't actually see the money," Hurley said.

"Younger generations respond well to competitive forces.

"So, if they see their friends achieving certain things and they have the opportunity to participate in some form of competition or game, it can really encourage setting up bigger goals and building the habits and doing the work required to get in a better financial position."

At the annual SMSF Association National Conference, ASIC senior executive leader for financial advice and investment management Leah Sciacca warned financial advisers that they have a critical role to play in stemming misconduct in the SMSF sector more than ever.

This comes to light at a time when the ATO and ASIC remain vigilant against the illegal early access of superannuation that is especially rampant within the SMSF sector.

Most SMSFs do the right thing, often with the assistance of professionals, she said, but some individuals might be persuaded to consider that SMSFs offer an opportunity to access superannuation savings early and illegally.

Financial advisers, accountants, and other SMSF professionals have a key role to play in addressing this problem, Sciacca said, urging them to alert ASIC if they come across any SMSF misconduct.

"Financial advisers advising clients about their super must use their professional judgment to consider the broad range of relevant factors in order to ensure SMSFs are established only when it is suitable for the unique objectives and circumstances of the individual," she said.

In recent years, ASIC's review of SMSF advice uncovered inappropriate advice, adviser fraud and dishonesty to the detriment of trustees. Some cases have resulted in criminal charges.

Sciacca named one example where a company director was sentenced to over four years in prison for dishonest conduct and other charges. The director encouraged investors to rollover their superannuation into newly created SMSFs and lend those funds to two companies where he was a director.

Today, ASIC said it accepted a court-enforceable undertaking from former financial adviser Shivdeep Jaidka after he failed to provide appropriate SMSF advice.

Jaidka most recently was an adviser at Merit Wealth under Diverger from October 2022 to June 2023. Before that Jaidka was with the SMSF Advisers Network, The SMSF Expert, and GPS Wealth.

Over five years, Jaidka agreed not to carry on a financial services business, provide financial services, or act in a managerial capacity of any entity operating a financial services business or providing legal, accounting or other advisory services to a financial services business.

Sciacca also reinforced ASIC's focus on scrutinising the SMSF sector this year as flagged in its corporate plan.

"We will also continue our current regulatory work with the ATO, responding to poor practices in the SMSF sector, including sharing information about actual, potential misconduct and taking action where we see inappropriate financial advice," she said.

ASIC co-regulates SMSF auditors with the ATO. There are currently 4341 registered SMSF auditors. As a result of referrals from the ATO's compliance program and other identified SMSF auditor conduct concerns, ASIC has deregistered 14 SMSF auditors and imposed conditions on 17 others so far in the 2024 financial year.

Financial Standard is the official media partner of the 2024 SMSF Association National Conference.

New analysis from the tax office released at the SMSF Association National Conference reveals that 66% of the illegal early access relates to individuals who are entering the system with no genuine intent to run a self-managed super fund.

Between 2019 and 2020, some $381 million of super was illegally accessed.

For the 2020-21 period, SMSFs lost about $255 million from illegal withdrawals while $170 million was protected at registration.

ATO deputy commissioner for superannuation and employer obligations Emma Rosenzweig told the conference that across these years about $635 million of superannuation savings left the system illegally via SMSFs.

"Prohibited loans are another way that trustees inappropriately provide financial benefits to many parties in the 2020 and 2021 years. Our analysis found that SMSFs entered into over $200 million in prohibited loans each year. What is pleasing though, is that over 75% of those loans have been repaid," she said.

Trends show that newly set up SMSFs were more likely to engage in such behaviour as opposed to established funds.

About two thirds of the total $930 million that was at risk over these years relates to individuals entering with no genuine intention to run an SMSF, Rosenzweig said.

Many of these trustees exhibited a lack of knowledge and a poor attitude towards their super. Others claimed they were in financial stress or were experiencing personal issues while some saw accessing their super in this manner was "too great a temptation to resist," she said.

When a newly established SMSF makes a rollover but doesn't lodge its first return is another red flag on the ATO's radar.

"Currently, 16% of funds that were registered in 2022 have failed to launch their first return, which means these returns are over 12 months overdue. Of the 50%, 2500 of them appear to have run out of money in their SMSF. Then we have existing trustees who inappropriately access their super and stop lodging to avoid detection," she said.

As a result of rogue activities, the ATO was forced to launch a new program - "the illegal early access estimate" which allows it to measure the size, scale and trajectory of the risks as well as gather intelligence to help address them, Rosenzweig said.

Financial Standard is the official media partner of the 2024 SMSF Association National Conference.

Hay-Bartlem joined the association as a director in July 2019 and was appointed chair in February 2022.

With a background in law, he is a currently a partner at Brisbane-based Cooper Grace Ward, where he has worked since 1993.

He specialises in advising on tax, superannuation, structuring and restructuring, and estate planning and succession. This includes assisting accountants, financial advisers, lawyers, and others help clients deal with these issues. He also leads the law firm's commercial and private client workgroup.

Hay-Bartlem said he is "honoured to be asked to remain in the role, especially at a challenging time for the SMSF sector."

"We are still negotiating with all interested parties over the government's proposed new tax on SMSF balances exceeding $3 million as well as contributing to the ongoing debate on the legislation emanating from the Quality of Advice Review," he said.

Hay-Bartlem addressed delegates at the opening of the SMSF Association's National Conference in Brisbane this morning, saying that the ongoing success of the annual conference is because of its members, their dedication to professionalism, and ability to foster a sense of community.

"As an association, we will continually work to promote the professionalism and integrity of the sector, while staying actively involved in discussions with government, stakeholders, regulators and policy makers," he said.

Financial Standard is the official media partner of the 2024 SMSF Association National Conference.

During this period, while the S&P/ASX 200 index declined by more than 10%, the median SMSF decreased by only 1%; comparatively, the median APRA-regulated super fund decreased 5.1%.

The University of Adelaide's International Centre for Financial Services (ICFS) research, commissioned by the SMSF Association, noted that the 4.1% margin marks the widest gap recorded in six years.

Moreover, the analysis of 394,000 SMSFs, covering 67% of all private super funds, revealed that 38% achieved positive returns, whereas less than 5% of APRA-regulated funds did so.

The SMSF Association said this demonstrates the resilience of SMSFs in market downturns.

ICFS research project head George Mihaylov said outperformance by SMSFs partly stemmed from a strategic allocation favouring domestic over international equities, in a year where the local market outperformed some international markets.

"We have shown in earlier research that less than 2% of SMSFs hold international equities, most often with allocated weightings that are low. This is in stark contrast with APRA funds, of which a much larger proportion diversify internationally, typically with larger weightings," Mihaylov said.

"Although this home bias generally leads to sub-optimal levels of investment diversification, it can also act to boost earnings and returns during periods where the domestic stock market outperforms some key international markets - precisely what happened in 2021-22 relative to the US."

SMSFs' performance was also attributed to a significant number of trustees adopting defensive asset allocations and asset classes.

SMSF Association chief executive Peter Burgess said the research was evidence of the SMSF sector's strong investment performance. He also said it indicates that SMSFs receiving financial advice tend to perform better.

"It's always been our mantra that SMSF trustees should get professional advice," Burgess said.

Heffron SMSF Solutions managing director Meg Heffron will be taking part in a panel at the annual SMSFA conference, which will be held at the Brisbane Convention and Exhibition Centre (BCEC) between February 21 and 23.

Heffron told Financial Standard that APRA-regulated super funds have experienced a lot of regulatory and legislative interference in the last couple of years.

"I'm looking forward to hearing about what that meant for that sector and what that might mean for us down the track. Will some of the legislative changes that they've experienced flow through to us?" she said.

One example is the federal government floating the possibility of making the Retirement Income Covenant applicable to SMSFs.

"I don't know that it should but, clearly, it's going to be [mandatory] for APRA-regulated funds, so it's always interesting to see what happens in that sector and what might be in our future," Heffron said.

Joining Heffron on the panel, Holding up the mirror - what the SMSF sector does well and where it needs to level up, are SMSF Association chief executive Peter Burgess, Class chief executive Tim Steele, KPMG partner Linda Elkins, and Brighter Super chief executive Kate Farrar.

At the conference, professionals will also be able to learn more about major issues directly affecting SMSFs.

Heffron said this includes the Australian Taxation Office's (ATO) focus on disqualifying people and illegal early release.

"I'm hoping we don't see anything too draconian, but it will be entirely reasonable if that really is on the rise and if it is becoming a big problem. The ATO's rhetoric around it would suggest it is, then you could completely understand why they've looked to make things tougher for setting up an SMSF," she said.

"So, I'm watching that with concern. It is not SMSF specific but it's finance-sector specific."

Another piece of regulation - non-arm's length expenses (NALE) and non-arm's length income (NALI) of small APRA funds and SMSFs that is awaiting Royal Assent - have received plenty of airplay.

NALE in particular, Heffron said, is raising concerns in the SMSF sector as there is the potential it will force members into "suboptimal outcomes".

With the proposed changes, Heffron said SMSFs could find it too hard to work out the market price for certain transactions and end up going to a completely arm's length person to provide a service at a much greater cost.

"The cost of making sure that SMFSs got it right will be disproportionate to the mischief that the government or tax office are trying to weed out," she said.

Financial Standard is the media partner for the 2024 SMSFA National Conference.

Count will acquire 51% of the business based on an enterprise valuation of $4.1 million. Count will pay an upfront consideration of $1.6 million and the remainder over 12 and 24 months, subject to Solutions Centric achieving certain EBITA targets in each 12-month period, it said.

Solutions Centric was founded in 2016 and delivers tailored and technical support to accounting businesses.

Count chief executive Hugh Humphrey said the acquisition supports the company's focus on expanding its services segment.

"This acquisition continues Count' recent strategic growth momentum with the addition of a quality and highly technical outsourced services provider," Humphrey said.

"...The need for reliable external providers with strong technical knowledge has never been more important in servicing clients and supporting practice efficiency."

Already this month, Count purchased the accounting book of Melbourne-based firm May Klye & Associates via its equity partner firm, Bruce Edmunds & Associates (Bruce Edmunds). It also acquired Business Accounting Melbourne via Kidmans Partners.

Solutions Centric managing director and chief executive Krish Sritharan said he is excited about leading the next chapter of the business and the benefits that come from joining the Count community.

"This strategic partnership with Count allows for the next stage of evolution and development for Solutions Centric within the professional services industry," Sritharan said.

"The existing synergies between Count and the management team at Solutions Centric will provide a strong platform for growth and support to the accounting and financial services industry in Australia."

The acquisition is expected to complete before March 31.

The SMSFA will host its flagship event at the Brisbane Convention and Exhibition Centre (BCEC) between February 21 and 23, with this year's theme urging the super and financial advice sectors to seize professional opportunities and find new ways to "Level Up".

The wealth management sector is gearing up for the Better Targeted Superannuation Concessions reform that will boost the current 15% tax rate on super balances above $3 million to 30%.

SMSF Association head of technical Mary Simmons told Financial Standard that this will become an inevitable reality when it takes effect on 1 July 2025.

"This topic is an underlying theme throughout the conference. For every single session at the conference that's relatable back to the $3 million cap tax, we have asked our speakers to address the implications," she said.

"A variety of speakers will talk about how the proposed $3 million tax is going to affect advising clients, be it from a death benefit or contributions perspective or via investment strategies. There'll also be discussions on alternative investment vehicles [and] wealth management strategies for high-net-worth clients."

Day one kicks off with a thought leadership breakfast: Holding up the mirror - what the SMSF sector does well and where it needs to level up.

SMSFA chief executive Peter Burgess will be joined by Heffron Consulting managing director Meg Heffron, Class chief executive Tim Steele, KPMG partner Linda Elkins, and Brighter Super chief executive Kate Farrar.

This year, the conference will host eight face-to-face workshops.

"In the workshops, we are pairing up the presenters so that we can offer a different lens to the delegates. So, it's not just strictly a legal view or an accounting view. We've tried in most of the sessions to incorporate an audit perspective because we recognise that our industry is what it is because of the collaborative efforts of everybody," she said.

"It's about understanding the role that each of those professionals has to play when dealing with the client and we feel that the workshops are perfect for that because they're multifaceted from that perspective, and give you the lens of all the professionals that are helping trustees make their retirement goals."

For the first time, the conference is offering more audit CPD hours.

"We recognise the importance of SMSF auditors. This year, in particular, we ran an inaugural listenership day where we had a one-day virtual event just for auditors. There's a real thirst for information for auditors, and we've found that the national conferences is a good way to incorporate their knowledge and share that with all the delegates that attend," Simmons said.

The conference will also host a dedicated workshop on ethics.

Where relevant, speakers will incorporate an ethical lens in their presentations that pertains to aged care, trustees, artificial intelligence and so forth.

"We also have a compelling series of practice management sessions designed to boost business acumen and operational effectiveness," Simmons said.

Financial Standard is the media partner for the 2024 SMSFA National Conference.

In August 2022, Janette Townshend was found to have breached independence requirements by auditing a fund where her spouse was a member and director of the trustee for six years.

She had served as an approved SMSF auditor since March 2013 and worked as an accountant for more than 30 years.

Townshend opted to appeal her disqualification to the AAT, claiming that while she recognised she had done the wrong thing, a disqualification was "an overreaction to what was simply a misunderstanding" on her part.

Townshend's counsel suggested it was "a misunderstanding the applicant acknowledges could have been addressed if she had been more diligent in seeking clarification of any doubt that might exist about her obligations." She further said there was no legitimate regulatory purpose served by disqualification and highlighted Townshend's experience and otherwise unblemished record.

Other arguments included that Townshend was under the impression that independence requirements laid out in the Code of Ethics "did not apply to SMSFs because the relevant provisions appear on their face to be directed to members of an audit team rather than individual auditors." Documents show she also "suggested in cross-examination that her misunderstanding was compounded by the failure of her professional association (and perhaps ASIC) to bring the detail and meaning of the independence requirements to her attention"; an argument the AAT described as "untenable".

The AAT deputy president Bernard McCabe rejected her arguments, stating that her level of experience suggests "she should have known better than to audit her husband's super fund." As Townshend submitted that auditing SMSFs contributes less than 10% of her income, McCabe also rejected concerns the disqualification would impact her livelihood.

"A wilful disregard of the independence requirement would be especially serious, but I accept that is not what happened here. Nor is there any suggestion that Ms Townshend failed to conduct the audits appropriately, or that she or her husband derived any advantage from her engagement (apart from any professional fees charged in respect of the audits in the ordinary course)," McCabe said.

"Having said that, the applicant's failure to appreciate there was a problem with undertaking the audits over several years is itself a matter of real concern. She should have known better, and the fact she did not raises question about her judgment. Her comment to the ASIC decision-maker that she perceived the audit role as being "mechanical in nature" suggests a serious misunderstanding about the auditor's role in the regulatory system applicable to SMSFs."

McCabe added that the action communicates a clear message as to the importance of complying with requirements.

With lending options up to $3 million, the 'super smart' loans are designed for SMSFs wanting to purchase or refinance an existing property and were developed in partnership with mortgage brokers.

Only $200,000 in net assets is needed to qualify for the loan, and there are no liquidity requirements, Pepper Money said.  Additionally, it offers loan term options of up to 30 years.

Further, redraws are available twice a year per the anniversary of the loan, up to $50,000 at a time in accordance with the SIS Act.

Residential interest rates typically range from 6.99%, and near-prime rates start at 7.69%. Meanwhile, prime interest rates for commercial properties begin at 7.89%, with near-prime rates starting from 8.69%.

According to the non-bank lender, it identified an opportunity in the market following ATO's SMSF June 2023 quarterly statistical report. The report found that SMSFs hold an estimated $876.4 billion in total assets and there were almost 598,000 SMSFs, an increase of 4% from the previous year.

Amid the resurgence of individuals seeking suitable investment properties for their funds and the exit of major banks from the market, Pepper Money said it aims to fill the market gap with its "timely" launch.

Pepper Money's general manager of mortgages and commercial Barry Saoud said against the backdrop, there is also an opportunity to add more diversity of offerings in the space.

"SMSF lending is being embraced by a growing number of Australians as one way to have some control and independence over their financial future," he said.

"The increased appetite for these loans, coupled with the lack of options for borrowers, presents an opportunity for mortgage brokers to add value for their current clients, as well as potentially adding new business streams to their practice."

Saoud went on to clarify that it's frequently observed that, even though a client's existing SMSF might be managing the loan, many are not informed about the interest rate they are currently on.

"This set-and-forget mentality could mean some clients are on a rate without questioning it," he said.

"Our new SMSF loan offering now provides mortgage brokers with a super smart approach for existing SMSF clients who aren't getting the sharpest solution from traditional SMSF lenders."

According to Saoud, the offering's pre-approval feature is an industry rarity.

"Empowering brokers to understand what their clients can borrow through their SMSF so that they can assess their options upfront," he said.

"We are renowned for our fast and flexible approach and now we're extending this approach and instilling broker confidence with pre-approvals in the SMSF space."

Saoud said Pepper Money's SMSF loan also provides brokers with direct access to its credit team and a digital application process for a seamless experience.

The non-bank can also consider clients who are directors of companies with credit impairment across both residential and commercial SMSF loans.

"With options across personal loans, home loans, commercial and SMSF, Pepper Money now has options that help meet the generational needs of your clients across a lifetime of circumstances," Saoud concluded.

According to a recent report conducted by the International Centre for Financial Services (ICFS) at the University of Adelaide and commissioned by the SMSF Association (SMSFA), it is expected that members whose additional tax liability averages over $80,000 during FY20 and FY22 will experience an impact.

According to the report, an estimated 13.5% of SMSF members would have experienced liquidity stress in meeting the new tax obligations.

The SMSFA said the research, sourced from over 722,000 SMSF members, provides the first real glimpse of the potential impact of the proposed tax change on the SMSF sector.

Commenting on the release of the research study, University of Adelaide Professor Ralf Zurbruegg said the liquidity stress has been exacerbated by the inclusion of unrealised capital gains in the measurement of earnings.

"Taxing unrealised capital gains is a somewhat radical departure from existing tax policy and extremely rare in OECD pension systems," he said.

"There are potentially far broader consequences than those already outlined, and we recommend that the legislators carefully reconsider the implications of this proposal in its current form."

The report also argues that the government is potentially short-changing itself by taxing unrealised capital gains.

ICFS deputy director George Mihaylov explained it's crucial to highlight that using a measurement of earnings that aligns with existing tax policy would not only alleviate the liquidity stress for some members in the short term but is also likely to yield more tax revenue for the government over the medium to long term.

"That's because this new tax will still be levied on capital gains, but only when the underlying assets are eventually sold. Under normal asset price appreciation over time, the overall tax base will be greater," he said.

Further, the report notes the treatment of unrealised capital gains and carried forward capital losses is highly problematic given the general nature of capital markets.

"It is common to see a string of bull market years followed by a sharp bear market decline. This means there is a strong possibility a member can effectively be cumulatively taxed on investments that make an overall loss without any real recourse to recover their tax expense," the SMSFA commented.

The association's chief executive Peter Burgess noted that including unrealised capital gains means year-on-year tax liabilities will be directly related to the performance of investment markets.

Further, he said this will add to the unpredictability and inequity of the proposed tax, making it extremely difficult for superannuants to plan investments and manage liquidity.

"Asset rich, income poor SMSF members will find it difficult to cover their additional tax liability, and this problem is likely to worsen over time as unrealised capital gains accrue while tax payments from previous years diminish liquidity," he said.

The research also highlights that selling illiquid assets is usually connected with significant transaction expenses, concerns related to market timing, and other macroeconomic factors that are likely to amplify the potential losses associated with meeting the new tax liability.

Burgess stipulated that other recent studies show around one in four SMSFs impacted by the tax change hold property.

"Given many will be small business operators and farmers who hold their premises and land in an SMSF, it's easy to see how disruptive this new tax will be not only for the SMSF sector but for small business operators and the broader community," he said.

"Clawing back the superannuation tax concessions for high balance superannuants was one thing, but taxing paper capital gains that may never be realised, is something completely different."

The National Farmer's Federation (NFF) also voiced strong opposition to the government's draft reforms and said that farmers commonly transfer their land assets - often key to their retirement savings - to self-managed super funds (SMSFs) to facilitate stable income post-retirement.

However, with the proposed bill taxing unrealised gains, many could face difficulty meeting yearly tax commitments without resorting to selling these crucial land assets.

Earlier in the month, NFF chief executive Tony Mahar said farmers consider their land holdings as their primary retirement nest egg.

"This practice is paramount in succession planning, where land assets are frequently transferred into SMSFs to facilitate retirement income for retiring farmers," he explained.

"The taxation of unrealised gains poses a genuine challenge for farmers, many of whom may find it difficult to meet the annual tax obligations without selling their land assets. This new tax could significantly impact a farmer's yearly retirement earnings, potentially exceeding them."

On February 28, the government announced from 1 July 2025 a 30% concessional tax rate will be applied to future earnings for superannuation balances above $3 million.

As previously reported by Financial Standard, the proposed changes are housed under two draft legislations - Treasury Laws Amendment (Better Targeted Superannuation Concessions) Bill 2023 and Superannuation (Better Targeted Superannuation Concessions) Imposition Bill 2023 .

Consultation on the exposure draft and explanatory materials commenced on Tuesday and closes October 18.

The 2023 Annual Benchmark Report reveals that Generation X aged 42 to 56 (52.7%) and Millennials aged 27 to 41 (23.7%) collectively drove 76.4% of new fund establishments in the 2023 financial year. Baby Boomers, aged 57 to 71, account for 21.3% of establishments.

Citing ATO data, the median age of members for all newly established funds was 46 years old in FY21, which has reduced from 54.1 years old a decade prior.

Class chief executive Tim Steele said the younger generation is realising the many benefits SMSFs offer, including flexibility, investment choice and control, as well as the opportunity to become more engaged in their retirement outcomes. They're also seeing SMSFs as a cost-effective structure.

"Interestingly, the data also shows members aged 75 and over are choosing to stay in SMSFs for longer," he said.

At the end of June, there were 610,287 SMSFs, up 4.2% year on year, according to APRA data. SMSFs comprise $876.4 billion or 25% of the $3.54 trillion superannuation pool.

On average, non-concessional contributions for Class members in FY22 rose by 28.1%, resulting from several factors including downsizing contributions, rebalancing strategies, the indexation of contribution caps, and the removal of the work test for people under the age of 67.

SMSF members appear to be enjoying tax-free earnings in retirement phase compared to APRA fund members. In contrast, nearly one in two members over 65 years old in APRA funds still have their entire balance in accumulation phase. Only one in eight Class members over 65 have their entire balance in accumulation.

"While this in part reflects the higher levels of engagement in the SMSF sector and likely the value of having access to financial advice, it also highlights that the superannuation sector collectively needs to do more to identify and service the retirement income needs of members," Steele said.

SMSFs are making inroads on closing the super gender gap compared to APRA funds. However, there is still a way to go before we achieve parity in super balances, he said.

"Interestingly, the data indicates that women have a higher average balance early in their careers. Perhaps unsurprisingly, the gender gap peaks at 25% in the 35-44 age bracket and, while reduced over time, the gap is never bridged," Steele said.

The new product features enhance its current SMSF deed and consolidate its position as the industry benchmark for SMSF documentation.

Further, the deed will act as the cornerstone for NowInfinity's new SMSF deed update and compliance solution, due to be released next year.

NowInfinity general manager Tracy Williams said the new features have been designed in collaboration with clients and industry experts and offer many benefits, "including providing greater flexibility and clarity for advisers and trustees, and importantly provide clarity with regards to death benefit payments for estate planning purposes."

Williams added that NowInfinity is committed to supporting accountants, lawyers, and other financial professionals by providing the best quality documents and technology solutions, "that enable them to efficiently and effectively establish and maintain entities on behalf of their clients."

"We've listened to their feedback and these new features are in addition to several document and compliance product enhancements that we've delivered this year to meet the emerging needs of our fast-growing client base," she said.

Turning to the launch of the reimagined SMSF compliance solution, Super Comply, Williams said the solution is being built to assist clients in updating their deeds and "access a central compliance module that will enable them to easily keep their SMSF deeds and investment strategies up to date and compliant."

NowInfinity flagged recent ATO data that shows28% of all SMSFs are established on its platform.

Specifically, the regulator has disqualified five SMSF auditors and imposed additional conditions on three SMSF auditors for failing to satisfy fit-and-proper person requirements or breaches of auditing standards, independence requirements and registration conditions.

Paul Barry, Stephen Funder, Bruce Jones, Gregory Leggett, and Malcolm Orman were disqualified from being SMSF auditors and their names have been added to ASIC's public banned register.

They are ineligible to reapply for registration, although Funder has already requested a review of the decision by the Administrative Appeals Tribunal.

Meanwhile, Toby Dodd, Mark Gregson and Clayton Lawrence have each had specific additional conditions imposed on their SMSF auditor registration.

These involve undertaking professional development, independent reviews of their audit files and tools, and notifying their professional association of the conditions.

Additionally, 413 SMSF auditors have had their licences cancelled as part of ASIC's recent compliance program.

According to ASIC commissioner Danielle Press, in the last year ASIC has acted against 26 SMSF auditors who failed to meet the independence and auditing standards, or whose conduct called into question the integrity of SMSF audits.

"The SMSF sector holds more than $865 billion in assets in over 600,000 funds and it is crucial that SMSF auditors comply with their regulatory obligations," Press said.

"ASIC will continue to take action where the conduct of SMSF auditors is inadequate."

In November last year, ASIC commissioner Sean Hughes said the regulator "will apply a range of regulatory tools against SMSF auditors who fail to meet the independence of auditing standards or whose conduct calls into question the integrity of SMSF audits."

HLB Mann Judd superannuation partner Mitchell Markwick pointed to recent changes proposed by the government that trustees must be mindful of.

The introduction of a new cap which could see earnings on super balances above $3 million taxed at an additional 15% to a total concessional rate of 30%, rather than 15%, has raised the ire of many, he said.

"While some argue the intention is to try to start limiting the size of super balances in order to raise tax revenue, this particular proposal in its current form has a number of fundamental flaws - specifically, the taxation of the movement in the market value (or the unrealised gain) of an asset.

"Once that asset is sold, people will still be required to pay capital gains tax on the sale once actually sold, therefore triggering a double taxation arrangement, thereby warranting further consultation," he said.

New statistics from the Australian Taxation Office found that on average SMSFs earned $27,266 in income in the 2020-21 financial year.

Investment Trends' SMSF Adviser Report found that new policy proposals, including indexation of the transfer balance cap and the $3 million cap present a variety of engagement opportunities for financial advisers.

On average, SMSF advisers estimate the indexation of the transfer balance cap may affect one in three clients, and that the $3 million cap is likely to impact 32% of clients.

When it comes to conversations around these changes, 24% of SMSF members are actively initiating discussions with their adviser about the proposed tax increase on super balances over $3 million.

Markwick urged trustees and members, in the lead up to June 30, to educate themselves and plan accordingly.

"They should be making the most of current superannuation rules, including those pertaining to contribution caps and indexation of caps, transfer balance and total super balance caps," he said.

Despite the constant change within the SMSF sector, Markwick said members and trustees should adhere to the current rules - and not those yet to be regulated or legislated.

"While there is always likely to be draft legislation proposed for future financial years, members need to focus and ensure they are administrating a fund based on the current rules," he said.