According to statistics released by the ATO on 17 December 2014, the number of self-managed super funds (SMSFs) has increased by 29% to 534,000 in 5 years and with total assets growing to $557bn. The statistics are featured in the ATO’s report entitled, Self-Managed Superannuation Funds: A Statistical Overview 2012-13.
“SMSFs account for 99 per cent of the total number of superannuation funds and 30 per cent of the $1.9 trillion total super assets in Australia,” Assistant Commissioner Matthew Bambrick said.
In 2012-13 SMSFs experienced a positive return on assets of 10.5 per cent, the highest over five years and the fourth consecutive year of positive returns.
It showed that over 5 years to 2012-13, contributions to SMSFs averaged $24.9bn a year on behalf of 64% of SMSF members. Notably, member contributions increased by 5% and exceeded employer contributions by approximately 3 to 1 in 2013. The ATO also reported that it continues to see the proportion of SMSFs with borrowings increase from 1.5% in 2009 to 5% in 2013. At June 2013, SMSF borrowings were equivalent to 1.9% of total SMSF assets. The next publication, based on data for the 2013-14 financial year, is anticipated to be released in December 2015.
The ATO’s new penalty powers will potentially rake in millions of dollars from the SMSF sector, according to Townsends Business & Corporate Lawyers.
In a statement released last week, Townsends said an expected minimum of $150 million in fines will be collected from the SMSF sector following the new penalty powers coming into effect on July 1 this year.
“It would seem that the SMSF sector is certainly doing its bit for the new government’s fiscal responsibility measures,” Towsends said.
The proposed ATO fines range from $850 for “simple” breaches to upwards of $10,000 for breaches such as providing financial assistance to members and their relatives.
Townsends added that it is critical that trustees ensure they are aware of their responsibilities and rectify any breaches immediately to avoid penalty notices.
“Trustees should start considering now whether there are any current breaches that need to be addressed in the lead-up to end of financial year to avoid a nasty fine being imposed,” Townsends stated.
A firm has paid an infringement notice penalty after making “potentially misleading statements” about the cost of setting up an SMSF.
SuperHelp Australia Pty Ltd has paid a $10,200 infringement notice penalty after making potentially misleading statements about the cost of setting up an SMSF using SuperHelp’s administration services, according to an ASIC statement issued this morning.
ASIC’s concerns related to an advertisment SuperHelp published in the October 2013 edition of the Australian Financial Review’s Smart Investor magazine, according to the statement.
“The representations were that fund set up was free and that pension fund set up was free, subject to ‘*conditions’. No conditions were disclosed in the advertisement,” ASIC stated.
“ASIC was concerned that although advertised as free, the conditions for fund set up required investors to pay $475 upfront – half the annual administration fee – to be eligible for ‘free’ fund setup. There were also restrictions on the number of members a fund could have and how many investments could be made.”
“ASIC was also concerned that pension fund setup was not free under any circumstance for investors under 60 years of age.”
ASIC’s deputy chairman Peter Kell said it is “crucial” investors are not misled when it comes to the cost of establishing an SMSF.
“Setting up an SMSF is an extremely important financial decision and consumers have a right to expect that representations made about setup costs reflect the actual costs they will incur”, Mr Kell said.
“ASIC has a particular focus on misleading claims that a financial product or service is “free”, as this may lead consumers to make inappropriate financial decisions”, said Mr Kell.
ASIC acknowledged in its statement that SuperHelp has taken steps to correct its advertising in the March edition of the Smart Investormagazine and is “developing improved processes for the sign-off of advertisements.”