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ATO data heaps pressure on ASIC's SMSF fact sheet

New ATO data has brought ASIC's SMSF expense fact sheet under renewed pressure.

Freshly released ATO figures show the median "operating expense" of SMSFs is $3923 a year, a stark contrast from data published by ASIC last year which stipulated the average operating expense of SMSFs was around $14,000.

The tax office's 2017-18 statistical overview of SMSFs shows the average total expenses of SMSFs across 2017-18 were slightly higher than the $13,900 quoted by ASIC's fact sheet, pegging the average cost at $14,879.

However, the SMSF Association has long believed the figure was not representative of the cost of operating an SMSF, and said earlier this year that the median figure was more accurate.

"We took issue with some of the figures that ASIC included in the fact sheet because they were unbalanced and inappropriate," SMSFA chief executive John Maroney said at the time.

"The average expense figure represented a questionable use of ATO statistics, as a more appropriate figure would relate to the median operational and investment costs of funds under $500,000, which is under $5000 per annum compared to the figure of almost $14,000 used by ASIC."

After the release of the ATO's new figures, Maroney today said the association is "extremely supportive" of the ATO's decision to release more granular data about SMSF expenses.

"Previous analysis relied on the use of averages that ignored the significant distortions caused by large SMSFs and funds choosing to use borrowings and buy extensive administrative, insurance and investment services," Maroney said.

"High total average expense figures have not reflected the reality of the typical SMSF, and we acknowledge the ATO's willingness to listen to our concerns and to present the data in a more transparent and meaningful way."

Maroney said ASIC's SMSF fact sheet was well intended, but noted that aggregated expense data made it difficult to "clearly determine the basic operating expenses of an SMSF. As a result, he said the publication "lacked balance and would have benefited from more context about optional expense components".

"What these revised tables clearly show is how SMSFs exceeding $2 million had a significant impact on the weighting of the costs allocated to an average figure," he said.

"In addition, the impact of expenses such as investment expenses, insurance and interest on investment borrowings were attributed to the average when many SMSFs choose not to use these services.

"The data allows us to take a fund with a typical establishment balance of between $200,000 to $500,000 and, if we only include the basic operating expenses, we can estimate the median operating expense to be around $3,400 for these SMSFs."

Read more: ASICNew ATOSMSF Association
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