ATO has had a big hand in letting SMSF know where it stands from time to time. It has brought its new penalty regime, especially in holding discussions with the Financial System Inquiry about how the LRBA transactions must proceed in the SMSF space. The premier body has come up with a few interesting SMSF statistics, too. Let’s read what they talk about.
Service providers are getting smart
There is a trend showing rationalisation of the service providers. From being considered “cottage industry” to being right up to the competency standard is a road well-travelled. The transition hasn’t been that smooth though, and has taken up its share of victims. Already, 440 auditors have been charged on grounds of incompetency. Accountants are also feeling the razor sharp edge of the ATO’s knife.
No more a male bastion
The SMSF sector started with being a largely male-dominated world. The figures have certainly changed. Women now take 47% of the SMSF pie. New fund establishments are seeing a wave of female members, with the exclusion of members over the age of 64.
Limited Recourse Borrowing
The Limited Recourse Borrowing Arrangements (LRBA) transactions, especially after the recommendations made by the Financial System Inquiry (FSI), have come under the ATO scanner. The scrutinising body feels that the playing ground is not level and that the SMSF-buoyed investors have better leverage while investing in residential real estate.
Furthermore, there is a stat which shows that 89% of the LRBA transactions are in the accumulation phase and 11% are forking out pensions and, thus, availing no benefits out of either the capital works deductions or the interest deductions.
Benefits surpassing contributions
The fact that the concessional contributions caps have tightened has given way to benefits outdoing the contributions over the SMSF scene. With a greater percentage of workforce moving into post-retirement, the scene is expected not to change for at least the foreseeable future.
