SMSF Association Media Release
It’s critically important not to draw the wrong conclusion from the recent Australian Financial Complaints Authority (AFCA) statistics relating to SMSFs, says Peter Burgess, CEO of the SMSF Association.
Addressing the Association’s Technical Summit in Sydney today, he said conflicted advice models and inappropriate advice were the “root cause” for the 95 per cent increase in SMSF complaints to AFCA in 2024-25 – not the SMSF structure itself.
“While it may be very tempting for some to jump to the conclusion that SMSFs are the problem, that’s simply not the case.
“These statistics, as well as the ballooning cost of Compensation Scheme of Last Resort (CSLR) levies, again highlight the importance of having a well-resourced regulator who can detect and act quickly on any signs of advice failure.”
On the topic of CSLR levies, Burgess said he welcomed Assistant Treasurer Daniel Mulino’s recent decision to consult with industry on potential options for implementing a special levy.
“The Association acknowledges the importance of such a scheme, but to reduce the burden on any one individual sector, we encourage Treasury and the Minister to explore ways of spreading the costs as widely as possible,” he said.
Burgess said the Association endorsed the statement by ACFA Deputy Chief Ombudsman, June Smith, who was recently quoted saying “we are well beyond black swan events and bad apples and we need to look at these systemic issues across the industry and prevent them from happening in the first place – it’s not enough to have a CLSR at the end when the harm has occurred”.
Burgess seized the opportunity in his Legislative Update: What You Need To Know address to delegates to reiterate the importance of a pragmatic ATO compliance approach following recent changes to the ATO’s pension ruling, requiring pensions failing the minimum standards to be commuted before a new pension can begin.
“This is particularly important for historical cases involving pensions that may have failed the minimum pension standards in a previous financial year and, in accordance with the original ATO view and prevailing industry practice, were not commuted before the pension was subsequently restarted the following financial year,” he said.
With the long awaited release of the updated Law Companion Ruling on the tax treatment of SMSF non-arm’s length expenses (NALE) now delayed till October 2025, Burgess urged the ATO to elaborate on the tax treatment of compliance-related expenses.
“The previous ruling implies that such expenses do not give rise to non-arm’s length income (NALI) even if incurred at non-arm’s length rates.
“Examples in the previous ruling, supported by recently issued private binding rulings, emphasise the importance of the capacity under which a service is provided. However, capacity appears irrelevant if it’s a compliance-related expense.
“Clarification is required on this important issue for the sector as many may be under the mistaken belief that any type of accounting fee incurred by the SMSF on non-arm’s length terms gives rise to non-arm’s length income,” he said.