Impact of Regulatory Action and Legislative Changes on SMSFs

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The world of finance is ever-evolving, and this includes the realm of Self-Managed Super Funds (SMSFs). In recent years, regulatory action and legislative changes have had notable impacts on SMSFs, affecting both the administration and growth of these funds. This article will delve into two such impacts.


ASIC's Actions Against SMSF Auditors

Regulators play a crucial role in maintaining the integrity of financial markets. The Australian Securities and Investments Commission (ASIC) is one such entity with its oversight of SMSF auditors.

In January ASIC cancelled the registration of 374 auditors of SMSFs who failed to lodge their annual statements. In a press release an ASIC Commissioner said: “SMSF auditors play a fundamental role in promoting confidence and instilling trust in the SMSF sector, which holds more than $865 billion in assets in over 600,000 funds. It is crucial that SMSF auditors comply with their regulatory obligations. ASIC will continue to take action where they do not meet these obligations.”

In April it followed this up with actions against a further 11 SMSF auditors for breaches of their obligations. This included breaches of auditing and assurance standards, independence requirements, registration conditions, or because ASIC was satisfied the individual was not a fit and proper person to remain registered.

These actions underscore the important role of auditors in maintaining the credibility of SMSFs and the regulatory focus on ensuring their compliance. It is crucial for SMSF trustees to engage with auditors who are fully compliant with their obligations, as failure to do so can lead to significant consequences. It also highlights the need for auditors to fully understand and adhere to their obligations to avoid regulatory action.

Increasing Tax on Super

A significant regulatory change affecting SMSFs was the introduction of transfer balance caps. These were introduced in 2017 to limit the total amount of superannuation that can be transferred into a tax-free environment. Originally limited to $1.6m, they were increased with indexation for new superannuation money to $1.7m in 2021. The transfer balance cap applying to each individual depends on his/her circumstances. Full details are available on the ATO website Transfer balance cap | Australian Taxation Office (

The 2023 Federal Budget announcements included a higher tax on superannuation balances in excess of $3m. The tax on the excess balance increases from 15% to 30%. Budget papers indicate that the additional tax will impact some 80,000 individuals in 2025–26, or approximately 0.5% of individuals with a superannuation account. Note that this tax rate is well below the current individual marginal tax rate of 47% (including Medicare levy).

While these changes reduce the attractiveness of superannuation, it still leaves superannuation as a very attractive form of saving. However, Individuals and SMSF advisors need to carefully consider the effects when planning their superannuation strategies.

The Future of SMSFs

Looking ahead, it's clear that the landscape of SMSFs will continue to evolve in response to regulatory changes. It is therefore necessary for members, trustees and advisors to keep abreast of these changes to ensure optimal outcomes and keep within the regulatory framework.

The number of SMSFs continues to grow with 606,217 as at 31 March 2023, almost 1% increase on 31 December 2022. Most new SMSFs are established by people under 50, with slightly more women than men in this age group becoming members of new SMSFs. Overall, however, more males than females are becoming members of new SMSFs (54.7% vs 45.3%). Source: smsf-quarterly-statistical-report-mar-2023_final.xlsx (


The world of SMSFs is dynamic, shaped by a variety of factors including regulatory changes. As these changes occur, it's vital for individuals and advisors to stay informed and adapt their strategies accordingly. By understanding and responding to these shifts, they can ensure they're getting the most from their superannuation funds.

This article does not constitute financial advice. Always consult with a financial advisor before making decisions about your superannuation.

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