SMSFA backs review of ATO's regulatory approach

The SMSF Association (SMSFA) has welcomed the Australian National Audit Office's (ANAO) review of the Australian Taxation Office's regulation of self-managed super funds, describing it as a timely opportunity to assess whether the regulatory framework remains fit for purpose as the sector surpasses $1 trillion in assets.

The ANAO performance audit will examine the effectiveness of the ATO's regulation of SMSFs, including how it manages regulatory risks, monitors non-compliance and investigates and sanctions funds that fail to meet their obligations.

SMSFA chief executive Peter Burgess said the review comes at a critical time, noting the sector and its regulatory landscape have evolved significantly since the ANAO last examined the ATO's oversight of SMSFs in 2007.

"Since the ANAO's previous SMSF audits in 2007, the sector has grown substantially, the regulatory environment has become more complex, and the ATO's role has evolved from a largely educative approach to a more active regulatory model," Burgess said.

"That makes this an important opportunity to assess whether the ATO's approach remains appropriately risk-based, proportionate and clearly anchored to its statutory role."

Burgess stressed the audit should not be viewed as a criticism of the SMSF sector, but rather as a chance to ensure the regulatory framework is operating efficiently and consistently.

"SMSFs now account for more than $1 trillion in retirement savings, so it is critical that the regulatory framework is robust, targeted and trusted," he said.

He added the review should examine whether the ATO's regulatory expectations remain appropriate, particularly during the establishment of new SMSFs.

"Front-end controls have an important role to play in addressing inappropriate SMSF establishments and illegal early release schemes. But those controls must be risk-based and administered efficiently so legitimate trustees are not caught in unnecessary delays," Burgess said.

The association also called for the audit to consider the role of SMSF auditors and the need for clearer more practical regulatory guidance where tax and superannuation obligations overlap.

"The objective should be a regulatory framework that is firm where it needs to be, practical in its administration, clear about the limits of the ATO's role and supportive of trustees and professionals who are committed to doing the right thing," Burgess said.