Planning is key as SMSFs enter new phase

Self-managed superannuation funds (SMSFs) have long been associated with older Australians and small business owners looking for greater control over their retirement savings.

But recent data suggests the sector is undergoing a quiet transformation.

Alongside tax reforms and persistent compliance challenges, younger people are slowly moving into the SMSF space. While 85 per cent of SMSF members are 45 years or older, there’s been significant growth in members aged between 25 and 34 years from just 2.4 per cent two years ago to around 10 per cent now.i

Almost 8,000 new SMSFs were established in the three months to the end of March 2025 with the number of new members increasing by 13,000. Australia’s SMSFs hold an estimated $1.02 trillion in assets with 26 per cent invested in listed shares and 16 per cent in cash and term deposits.ii

A new tax era

The new Division 296 super tax, due to apply from 1 July 2025, is aimed at those with total superannuation balances exceeding $3 million. An extra 15 per cent tax will apply to earnings on the portion of a member’s balance above $3 million, effectively lifting the tax rate on those earnings to 30 per cent.

What makes Division 296 particularly contentious is the inclusion of unrealised gains. For example, a share portfolio the SMSF holds has seen positive returns. Trustees may face tax liabilities on paper profits, even if assets haven’t been sold. This may cause issues for SMSFs holding illiquid assets such as property or farmland that has increased in value.

SMSF Australia and other industry bodies have raised concerns about fairness, complexity and the potential for unintended consequences.

Trustees with high balances should begin planning now before 30 June 2026, to consider asset rebalancing, contribution strategies and the timing of withdrawals. SMSF Australia recommends obtaining advice about your specific circumstances.iii

The advice gap

Despite the increasing complexity of SMSF regulation, the vast majority of trustees continue to operate without professional advice. While the number of SMSFs using financial advisers has grown to 155,000, up from 140,000 in 2023, some 483,000 are not using a financial adviser.iv

This could lead to costly mistakes, especially when navigating contribution caps, pension strategies or related-party transactions. SMSF Australia says that while there’s no legal requirement to obtain advice from a licensed financial planner, “unless you have the skills and expertise to do this yourself, it is certainly conventional wisdom to do so”.v

The compliance burden

Every SMSF must undergo an annual audit by an approved SMSF auditor. This includes verifying the fund’s financial statements and ensuring it is compliant with super laws. Trustees are also required to value all fund assets at market value as at 30 June each year, using objective and supportable data.

For property and other complex assets, valuations can be time-consuming and costly. The ATO recommends using qualified independent valuers when assets represent a significant portion of the fund or are difficult to assess. Auditors may request evidence such as comparable sales, agent appraisals or formal valuation reports.vi

Failure to maintain accurate records or provide sufficient documentation can result in audit delays, contraventions or penalties. Trustees must also ensure their investment strategy is regularly reviewed and documented, particularly when starting pensions or making significant contributions.

Looking ahead

As the SMSF sector evolves, trustees face a dual challenge: adapting to new tax rules and maintaining rigorous compliance. For those considering an SMSF – or already managing one – the message is clear. Getting financial advice can give you peace of mind when the rules are regularly changing.vii

With Division 296 to contend with and a younger demographic stepping in, the sector is poised for both growth and greater scrutiny.

Whether you’re a seasoned trustee or just starting out, now is the time to review your fund’s structure, seek expert guidance and ensure your paperwork is in order. The future of SMSFs may be more dynamic than ever, but it will also demand greater diligence.

Contact us if you have any questions.

i Highlights: SMSF quarterly statistical report March 2025 | Australian Taxation Office

ii Self Managed Superannuation Funds – SMSF quarterly statistical report March 2025 – Data.gov.au

iii Understanding Div296 I How will taxation of unrealised gains work

iv New SMSF trustees propel uptake of financial advice, but $1 trillion sector still has significant advice gaps | Vanguard Australia

v What are the rules for Financial Planners giving SMSF Advice? – SMSF Australia

vi SMSF administration and reporting | Australian Taxation Office

vii About SMSFs | Australian Taxation Office

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RBA Announcement – August 2025

At its latest meeting, the Reserve Bank Board announced it was lowering the cash rate from 3.85 per cent to 3.60 per cent.

Please click here to view the Statement by the Monetary Policy Board: Monetary Policy Decision.

With the official rate change, we’re watching closely what the banks do with their rates, as some of Australia’s biggest lenders may make changes to their rates.

You will be notified directly by your bank if and when they change their interest rate.

Please get in touch if you would like to discuss recent rate movements or if you would like to review your finance options.

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Market movements and review video – August 2025

Stay up to date with what’s happened in the Australian economy and markets over the past month.

Interest rates and tariffs continue to influence markets globally.

After the RBA’s surprise move to leave rates on hold at its July meeting, soft inflation data has paved the way for a future rate cut.

The ASX 200 climbed to a fresh record high during the month of July. Wall Street also recorded all-time highs as tariffs begin to be locked in and AI investment takes off.

Click the video below to view our update.

Please get in touch if you’d like assistance with your personal financial situation.

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New financial year, new super rules 

With a new financial year underway, now’s the time for small business employers to check they’re across the latest changes to super obligations – from Superannuation Guarantee (SG) increases to updated balance contribution caps. 

Here’s a brief roundup of the super changes you need to be aware of from 1 July 2025. 

SG rate rises to 12% – what it means for you 

A key change small business employers need to be aware of is the increase in the SG rate to 12 per cent. 

This means you need to contribute a minimum of 12 per cent of your employees’ ordinary time earnings to their chosen super account. (Obviously, if your eligible employees have a higher percentage listed in an award or employment agreement, you need to pay this higher amount).i 

You should ensure all super and payroll calculations reflect the increased rate. 

Employees making voluntary contributions or salary-sacrificing should be encouraged to review their super arrangements to avoid exceeding their annual contributions caps. 

Make sure no employee is missed 

Now is a good time to check you are paying SG for all eligible employees. Before 1 July 2022 you didn’t have to pay SG for workers earning less than $450 a month. But you now have to pay super, regardless of how much they earn. 

Generally, all employees must be paid super, despite their employment status. This includes full-time, part-time and casual workers, temporary residents such as backpackers, company directors and family members. 

If an employee is under 18 years, SG must still be paid when they work more than 30 hours in a week. 

Reduced SG base for high-income employees 

The higher SG rate also affects the indexed maximum super contribution base used to determine the maximum quarterly limit for a high-income employee’s earnings base. 

From 1 July 2025, the quarterly maximum super contribution base is $62,500, which means the maximum SG payment amount per quarter is $7,500. The new limit is a decrease from the 2024-25 quarterly limit of $65,070. 

As an employer, you are not required to pay SG on the part of your employee’s earnings above this quarterly limit, so review your payroll settings to ensure they reflect the reduced cap. 

Annual contributions caps remain stable 

While knowing these super changes is important, it’s also essential to know what is not changing on 1 July 2025. 

The annual concessional contributions cap remains at $30,000, while the non-concessional contributions cap stays at $120,000. This means the three-year bring-forward cap also remains at $360,000 (The bring-forward rule allows those who are eligible to pay up to three years of after-tax super contributions in one year).ii 

While you’re not responsible for tracking employees’ contribution caps, it’s important to understand them because they may affect staff making voluntary contributions or salary sacrifice arrangements. 

Suggest that employees track all contributions entering their account and consider adjusting their super arrangements if they are nearing their annual cap. 

Balance caps increase 

The other key changes to be aware of is the increase in the general transfer balance cap (TBC) from $1.9 million to $2 million from 1 July 2025. The TBC is the limit on the total amount of super that can be transferred to the retirement phase. 

The total super balance cap (TSB), which includes all of an employee’s super and retirement phase accounts, is also increasing to $2 million. This cap is used to determine eligibility for non-concessional contribution and bring-forward arrangement amounts, carry-forward concessional contributions, spouse tax offsets and government co-contributions. 

The cap increases do not directly affect employers, but they may influence an employee’s decision on making additional super contributions or moving into retirement. 

If you would like more information about the new super obligations for 2025-26, contact our office today. 

i Super guarantee | Australian Taxation Office 

ii Concessional contributions cap | Australian Taxation Office 

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Market movements and review video – July 2025 

Stay up to date with what’s happened in the Australian economy and markets over the past month. 

Wars in Europe and the Middle East, volatile oil prices and shifting US policies are making headlines – but failing to dampen market optimism. 

The ASX closed the financial year with a near 10% return – its strongest since the COVID-19 crisis and despite US tariff threats. 

Despite tariff risks for the US economy, the S&P 500 index surged to a four-month high on hopes of future rate cuts and smooth trade negotiations. 

Click the video below to view our update. 
 
Please get in touch if you’d like assistance with your personal financial situation. 
 

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Get prepared to make tax-time easier

There are always lots of tax-related tasks to complete every EOFY, but as we move into the upcoming financial year, it is also worth getting to grips with new tax changes the Government’s election promises will usher in on 1 July, which we’ve outlined below.

New 2025-2026 tax changes

During the election campaign, the Labor government announced a number of tax changes.

These include the introduction of a standard $1,000 deduction for work-related expenses for taxpayers with labour income, a 20 per cent reduction in HECS-HELPS debts, and an extension of the $20,000 instant asset write-off until 30 June 2026.

Legislation has already been passed to cut the tax rate for individuals and is effective from 1 July 2026. The rate for income between $18,201 and $45,000 will be reduced from 16 per cent to 15 per cent, with a further reduction to 14 per cent in the following financial year.i

The government has also made it clear it intends to proceed with its draft legislation (Division 296) reducing the tax concessions for super accounts with a balance exceeding $3 million. This legislation will double the tax rate on earnings related to the portion of the balance over $3 million from 15 per cent to 30 per cent.

Now, let’s look at a few ways you can get prepared in the lead up to 30 June.

Start your tax preparations now

The ATO has announced its tax time hitlist, so it’s also important to check your current tax arrangements are not going to leave you vulnerable to an audit or significant penalties. The main focus for the ATO this year is work-related expense claims, investment properties and holiday home claims, and sharing economy income and cryptocurrency.i

With the ATO taking a much tougher stance on both tax reporting and payments, make sure you lodge and pay on time, or you could face penalties and interest charges. From 1 July 2025, interest paid to the ATO will no longer be tax-deductible.

Tips for businesses

Review and update all of your financial records and identify expenses that could be deductible.

You may want to make some deductible purchases prior to EOFY to help reduce your taxable income for the financial year. The small business instant asset write-off limit for 2024-25 is $20,000.ii

Also check your debtors, inventory and fixed assets, and ensure you write-off any debts that are not recoverable. Review any capital gains and losses and consider offsetting the gains with capital losses.

Check all required super contributions for employees have been made, plus any additional contributions for business owners. Ensure these contributions are received by the funds specified cut-off date to qualify for any tax deduction.iii

To-do list for personal tax

Getting your personal tax information prepared is also important, particularly given the ATO’s focus on personal deduction claims.

If you have regular deductible expenses (such as interest on investment loans and annual payments), consider prepaying them before 30 June so you can claim a deduction this financial year.

If you are likely to have personal capital gains tax obligations from the sale of assets, consider whether you should try to offset them against capital losses.

Time for some super contributions

Consider making extra personal super contributions before the financial year ends if you can.

Before making any contributions, check the total amount of both your concessional (before-tax) and non-concessional (after-tax) contributions across all your super accounts to ensure you do not exceed the annual cap limits.iv

Other super contributions to consider include personal tax-deductible contributions, contributions on behalf of your spouse and eligible contributions that could earn you a co-contribution from the government.v

If you would like to discuss EOFY preparations for either your personal tax or business, please call our office today.

i ATO unveils ‘wild’ tax deduction attempts and priorities for 2025 | Australian Taxation Office

ii Instant asset write-off for eligible businesses | Australian Taxation Office

iii Missed and late super guarantee payments | Australian Taxation Office

iv, v Caps, limits and tax on super contributions | Australian Taxation Office

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Tax update June 2025

ATO individual and business priorities

The Australian Tax Office will be cracking down on work-related expenses in personal tax returns this year after recently revealing some of the claims that have been submitted in the past.

The ATO is also reminding businesses of this year’s limit for the popular instant asset write-off and its ongoing focus on GST fraud.

Here’s a roundup of the latest tax news.

‘Wild’ deduction claims

The tax office caused some raised eyebrows with its revelations about ‘wild’ work-related expense claims made by some taxpayers, including a mechanic claiming an air fryer, TV, gaming console and microwave.i

Other claims deemed to be personal rather than work-related included a truck driver claiming swimwear so he could go for a swim when stopped for a break, and a fashion industry manager claiming over $10,000 in luxury-branded clothing that was purchased to wear to work functions.

This time the ATO says it intends to focus on common taxpayer errors, such as work-related expenses, working from home deductions, and income from multiple sources (including side hustles like ride sourcing services or selling services via an app).

Instant asset write-off limit

The ATO is reminding taxpayers who purchased business assets during the financial year that the instant asset write-off limit in 2024-25 is $20,000.ii

The instant write-off (which allows you to immediately deduct the business part of the cost of eligible assets) is available to businesses with an aggregate annual turnover of less than $10 million who use the simplified depreciation rules.iii

The full cost of eligible depreciating assets (both new and second-hand) costing less than $20,000 on a per asset basis, may qualify for the deduction.

Focus on business GST fraud continues

A Melbourne man has been sentenced to 2 years and 11 months’ imprisonment after obtaining over $390,000 in fraudulent GST refunds and attempting to obtain a further $330,000.

The sentence reflects the continued ATO focus on stamping out GST fraud, with the acting deputy commissioner Kath Anderson noting there were “no ifs, ands or buts here – if you don’t run a business, you don’t need an ABN and you cannot claim GST refunds”.

The ATO-led Serious Financial Crime Taskforce remains on the lookout for potentially fraudulent GST activities, with information sharing identifying businesses using complex financial arrangements (such as false invoicing, misaligned GST accounting methods and claims for fake purchases) to obtain larger GST refunds.

New small business benchmarks released

Small business owners keen to take the ‘pulse’ of their business can now use updated financial benchmarks covering 100 different industries produced by the ATO.

Updated annually, the benchmarks are designed to help business owners compare their performance against other businesses in the same industry.

Owners can use the information to identify if their performance is within the normal range for their industry, which mean it is less likely to attract ATO attention.iv

Paperless SMSF reporting

The ATO has emailed trustees of SMSFs still completing and lodging paper activity statements encouraging them to move to paperless reporting for improved security and convenience.

The regulator says benefits of paperless reporting include an additional two weeks on the fund’s lodgment deadline, reduced errors, faster refunds and easier recordkeeping.

In line with the push for greater digital SMSF reporting, the ATO recently noted non-lodgment of SMSF annual returns remains a concern and this can result in trustee penalties and removal of a fund’s compliance status.v

Estimates of illegal early access in SMSFs is also worrying the regulator, with prohibited loans from funds increasing.

Help with compromised TFNs

With identity theft continuing to increase, the ATO has updated its information for taxpayers who find their tax file number (TFN) has been compromised.

TFNs can be comprised through a number of different channels like email or phishing scams, or through data breaches at legitimate organisations as well as ID theft by criminals.

Anyone who believes their TFN has been compromised or used illegally should contact the ATO immediately on 1800 467 033.

i ATO unveils ‘wild’ tax deduction attempts and priorities for 2025 | Australian Taxation Office

ii Instant asset write-off for eligible businesses | Australian Taxation Office

iii Simpler depreciation rules for small business | Australian Taxation Office

iv ATO releases new small business benchmarks for 100 industries | Australian Taxation Office

v Highlights from the 2025 SMSFA conference | Australian Taxation Office

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5 steps towards a financially fit retirement

If retirement is just around the corner, the current financial climate may make you feel a little uneasy. Watching the markets fluctuate might leave you worrying about whether your superannuation will be enough to see you through.

It’s not a time for hasty moves, though.
If you are concerned a calm review of your current portfolio and investment strategy may be helpful.

After all, the average Australian spends around 20 years in retirement, so it’s important to create a retirement strategy that takes account not only the current market conditions but also the risks and opportunities in the years ahead.

As one of the most significant retirement assets, your superannuation needs a carefully considered assessment as you approach any new life stage.

Here are five useful tips to help ease you into the next chapter towards retirement.

1. Review your risk profile and portfolio allocation

Check your super portfolio’s risk profile. Generally speaking, investors take a high-growth approach when they’re younger to take advantage of higher returns, however, as with normal share market cycles, there will be fluctuations in the share market. Having a long-term strategy gives you the time to recover from any market downturns before retirement.

Older investors may prefer a more conservative investment strategy that can help to stabilise returns by potentially protecting super from share market volatility.

2. Calculate retirement expenses

Be realistic about the living expenses you’ll need when you finish working. For some, it may cost less to live in retirement because of reduced expenses such as commuting costs and maintaining a work wardrobe.

On the other hand, you may plan to travel more or buy a new vehicle or renovate your home, so these expenses need to be factored in when working out how much you’ll need.

According to the Association of Superannuation Funds of Australia (ASFA), the annual average budget to maintain a comfortable lifestyle in retirement is $73,077 for a couple and $51,805 for a single person.i

And to maintain a modest lifestyle, ASFA estimates a couple will need $47,470 and a single person will need $32,897. Both estimates assume you already own your own home.

You can find easy-to-use tools on the MoneySmart website to help you work out your budget and also estimate your income from super and the Age Pension.

3. Take action on mortgages and loans

Entering retirement with manageable or small levels of debt can contribute to feeling more financial stable.

If you’ll still be repaying a mortgage after you’ve retired, you could consider downsizing your home or using superannuation funds to pay down the debt, keeping in mind the tax implications and ensuring that you comply with superannuation laws. If you’re considering either of these courses of action, we’d be happy to explain your options and obligations.

4. Check your timing

Understanding when and how you can access your super is important.

You can use your super to fund your retirement when you reach “preservation age”, which is from age 60. You can also use your super to begin a transition to retirement income stream (TRIS) while continuing to work.ii

Alternatively, if you continue working beyond preservation age, you can withdraw your super once you turn 65.

There are also some circumstances in which you can access your super early such as illness and financial hardship, however, eligibility requirements do apply.iii

5. Decide how to withdraw your funds

You may be able to withdraw your super in a lump sum, if your fund allows it. This could be the entire amount you have invested, or you could receive regular payments.

If you ask your fund for regular payments (paid at least once a year), it is known as an income stream and your super account transitions from the accumulation phase – where contributions are made – to a pension.

There are minimum withdrawals that you must make once you commence an income stream from super. For example, for those aged under age 65, a minimum annual withdrawal of 4 per cent of your super balance is required and this drawdown rate increases as you get older.iv

There is a lot to think about as you approach retirement, so if you’d like to discuss your retirement income options, please give us a call.

i ASFA Retirement Standard, December 2024 – The ASFA Retirement Standard – ASFA

ii Super withdrawal options | Australian Taxation Office

iii When you can access your super early | Australian Taxation Office

iv Payments from super, April 2025 – Payments from super | Australian Taxation Office

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ATO watchlist for small business breaches

Pandemic-era leniency is a thing of the past and the regulator is warning small and medium enterprises (SMEs) it is keeping an eye on them.

Information is now published quarterly on the ATO’s SME focus areas webpage. The focus areas currently include – deductions and concessions, personal use of business income, operating outside the system and poor reporting habits.i

Business not personal income

Incorrect use of business money and assets is a perennial issue for the ATO, but it is reporting an increased use of business money and assets for personal purposes.

The ATO says the main area where SMEs are making errors relates to the integrity rules in Division 7A of the Income Tax Assessment Act. These rules apply when a private company attempts to provide money or other benefits to its shareholders or their associates tax-free.

According to the ATO, common errors in this area are caused by shareholders (both owners and associates) failing to understand the company is a separate legal entity and its money and assets do not belong to them and cannot be used for private purposes.

Failing to meet Division 7A requirements when making, repaying or managing loans to shareholders and associates is also attracting the ATO’s attention.

A private company making these types of loans must meet a number of requirements, including – entering into a complying loan agreement, charging interest at the benchmark interest rate, declaring the interest in the shareholders’ assessable income, and making repayments by 30 June (see Case Study).ii

Incorrect deductions and concessions

The ATO has also turned the spotlight onto those who incorrectly claim and offset business losses against other income sources.

Some taxpayers are claiming losses from a business activity (as either a sole trader or an individual in a partnership) where the activity is not related to their primary source of income.

Non-commercial business losses (NCL) cannot be offset against assessable income earnt from other activities in the year in which the losses are made.iii

Operating outside the tax system

Although taxi, limousine and ride-sourcing services have been on the ATO’s hitlist for some time, there is a continuing focus on businesses operating outside the tax system.

Operators in this area must register for GST regardless of their annual turnover and ensure they collect and pay GST and income tax on all rides and other business income.

The ATO is using a range of data sources to check that all drivers register for a Tax File Number (TFN), Australian Business Number (ABN) and the Goods and Services Tax (GST).

Drivers choosing not to register or comply with GST and income tax obligations may find the ATO itself registers them for GST and backdates their registration.

Contractor income and TPRS

The ATO is also checking on contractors who incorrectly report or omit contractor income.iv

The taxable payments reporting system (TPRS) now covers building and construction, courier, cleaning, IT, road freight and security services. These businesses must now lodge a taxable payments annual report covering contractor payments.v

Building good habits

The final area of current focus is changing small business GST reporting from quarterly to monthly.

From March 2025, those with a history of failing to comply with their reporting obligations will receive written communications from the ATO notifying them their reporting cycle has changed to monthly.

Targets of this action will be businesses who failed to respond to previous ATO communications and who have demonstrated a poor compliance history (such as paying late or the incorrect amount, failing to lodge or lodging late, and reporting their tax obligations incorrectly).

The shorter monthly reporting cycle change is designed to embed good business habits into the targeted business by better aligning reporting with their reconciliation process. According to the ATO, some SMEs have voluntarily moved to monthly GST reporting to improve cash flow management and keep their recordkeeping accurate.vi

Please give us a call if you are concerned about any of these issues so that we can help you decide on the best course of action.

i Small business focus areas | Australian Taxation Office

ii Loans by private companies | Australian Taxation Office

iii What is a non-commercial loss? | Australian Taxation Office

iv Contractors omitting income | Australian Taxation Office

v Taxable payments annual report (TPAR) | Australian Taxation Office

vi Good business habits | Australian Taxation Office

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Market movements and review video – May 2025

Stay up to date with what’s happened in the Australian economy and markets over the past month.

The month of April was marked by economic uncertainty and global trade tensions that drove market declines and volatility.

These events are anticipated to influence the RBA’s cash rate decisions, as will the recent decline in core inflation to within the target range.

Click the video below to view our update.

Please get in touch if you’d like assistance with your personal financial situation.

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