SMSFs

In a review of financial product issuers’ compliance with requirements meant to ensure complex and high-risk investments are kept out of the wrong hands, the regulator found room for improvement – and reminded issuers of its enforcement powers.

Following the Labor government’s decision to shelve a program meant to streamline and modernise Australia’s business registry system, the SMSF Association has argued for keeping “key aspects” of the scheme that would have meant material improvements for corporate trustees and the SMSF sector.

The third annual Your Future Your Super performance test saw just one MySuper product fail, while 12 per cent of trustee-directed products failed in their first year subject to the test. The results follow a report showing superannuation assets jumped in value since June 2022.

The ATO said failures to preserve superannuation benefits and comply with auditing requirements led it to disqualify 753 SMSF trustees this year and issue nearly $30 million in penalties, as it warned of increased scrutiny going forward.

With Treasury currently considering amendments to provisions governing non-arm’s-length income and expenses (NALI/E), the SMSF Association and other professional bodies say the ATO should not rush a controversial tax determination about NALI and capital gains tax in SMSFs.

While she acknowledged some in the industry may be resistant to expanding the scope of who can provide advice, the principal architect of the Quality of Advice Review urged support for its adoption, saying her recommendations are good for advisers and, most importantly, for consumers.

Absolute-return bond strategies should perform even in down markets, but a Morningstar report shows most failed to meet their own performance targets in a rocky 2022. However, as an alternative to traditional fixed income, these strategies still provide the defensive correlation, the research firm argues.

With new data showing offshore share investments comprise just 2 percent of total self-managed superannuation fund assets in Australia, advisers are warning SMSFs against overreliance on domestic shares and cash and urging diversification.

With almost $600 million worth of SMSF assets held in art – up 54 per cent since 2016 – the original alternative investment is seeing a significant resurgence in popularity.

Approximately a third of SMSF holders under advice will be hurt by the new cap on discounted superannuation balances, the researcher says. A bump in the TBC cap will help some, but add to complexity for advisers.

The test allows investors who can certify that they earn $250,000 a year or have more than $2.5 million in net assets to access higher-risk securities normally off-limits to individuals. But many say the test is confusing and outdated, and an independent statutory body has called for an update.

While the move to tax superannuation balances above $3 million at a higher rate would affect only a handful of people at first, if the threshold is not indexed to inflation, future generations may be turned off from investing in their super, industry leaders say.