Graeme’s Super News – October Edition
Read the latest updates from Graeme Colley, a respected educator, policy advisor, and technical expert with over 30 years’ experience in taxation and superannuation.
Update on Division 296
Division 296 amends the income tax law to introduce an additional tax of up to 15% on the increase in a person’s Total Superannuation Balance for the year on balances above $3 million. It was intended to take effect from 1 July 2025.
Based on recent media reports the government has paused progression of the tax. If the legislation does make it into to parliament it may not be in the same form as the original bill which lapsed on 21 July 2025. It may be better to wait until we see whether the legislation will go ahead and, if it does, whether any changes are made to the lapsed bills.
It is rumoured that the $3 million threshold may be indexed which may relieve one of the main issues with the legislation. However, the member’s total superannuation balance which is used to determine the threshold may still include unrealised capital gains in the calculation.
At the moment it’s just wait and see what the government proposes to do.
Amendments to superannuation contributions ruling finalised
Taxation Ruling TR 2010/1 Income tax: superannuation contributions has been amended by TR 2010/1A4 to provide the ATO’s view of the link between the non-arm’s length income provisions in section 295-550 of the ITAA ’97 and superannuation contributions. The amendments are relevant for trustees of super funds, particularly SMSFs, in determining whether the non-arm’s length income rules apply when making in specie contributions.
The amendments to TR 2010/1 also cover value shifting arrangements to exclude those occurring from 28 November 2024. But it covers the ATO’s approach to arrangements entered into prior to that date in Appendix 2 of the Ruling.
In relation to determining whether personal contributions are deductible the amended ruling covers the removal of the maximum earnings test which has applied since 1 July 2017.
Amended non-arm’s length income/expenditure ruling finalised
Law Companion Ruling LCR 2021/2 has been amended by LCR 2021/2A3 to clarify how amendments to section 295-550 of the ITAA ‘97 operate in a scheme where the parties do not deal with each other at arm’s length. It applies where the trustee of small complying superannuation funds, such as an SMSF or SAF incurs non-arm’s length expenditure (or does not incur relevant expenditure) in gaining or producing the fund’s ordinary or statutory income.
The revised ruling provides clarity to a range of NALI/E issues including the difference between services provided as a trustee and in a professional capacity.
ATO SMSF Stats for the June Quarter 2025
The latest SMSF quarterly statistics as at June 2025 were released in early September and highlights the continued growth of SMSFs. The ATO statistics show that there are 653,062 SMSFs which have a total of 1,203,127 members.
During the 2024/25 financial year there was an increase of 38,449 funds, which was a substantial increase over each of the previous three years. Nearly two-thirds of the increase in SMSF memberships has come from the younger age groups. Although over 50% of members are in the 60+ age group.
SMSFs now hold over $1 trillion in assets with the largest asset classes being listed shares and cash and term deposits.
The ATO’s SMSF quarterly statistical reports is available from the ATO website at June 2025 ATO SMSF statistics
Government Audit Office Review of SMSFs
The Australian National Audit Office (ANAO), has listed an audit of the ATO’s regulation of SMSFs for the 2025/26 financial year as well as a follow up audit of employer compliance with Superannuation Guarantee. The ANAO last examined the ATO’s management of SMSFs in 2007, and Superannuation Guarantee non-compliance in 2022.
The review of employer compliance with the Superannuation Guarantee requirements, compliments the introduction of the payday super which is due to commence on 1 July 2026.
Cancellation of Auditor Contravention Reports
If you are an SMSF auditor, the ATO must be notified if a reportable contravention under the SIS Act has occurred, is occurring or may occur. The contravention is made by lodging an Auditor Contravention Report (ACR) within 28 days of completing the audit.
However, if the ACR was sent to the ATO because of a genuine error then it can be cancelled. Genuine errors include:
- lodging under the wrong fund ABN
- providing incorrect information about the contravention based on the evidence you had in your possession at the time of reporting the contravention to us.
If the information received after lodging the ACR shows that the reported contravention was incorrect, didn’t occur, or has been rectified, a revised ACR should be lodged with the ATO. This can be done by using the ATO’s Online services for business to request a cancellation. If the ATO considers there are valid reasons for cancellation it will reply within 28 days of the request.
Issues with accountants’ wholesale investor certificates
In late June 2025 the Australian Financial Complaints Authority (AFCA) handed down a decision Case number: 12-00-1080719 concerning an SMSF which had invested in Contracts for Difference (CFDs) on the basis that it was a wholesale investor for purposes of the Corporations Act 2001.
AFCA came to the conclusion that the SMSF was a retail client because the financial services provided by the financial firms involved related to a beneficial interest in the SMSF, which was a superannuation product, and the SMSF held less than $10 million in net assets as required under the Corporations Act 2001.
The decision in this case changed a longstanding understanding on the basis of an ASIC Media Release 14-191MR Statement on wholesale and retail investors and SMSFs | ASIC . It indicated that if a superannuation fund held less than $10 million in net assets that ASIC would no action if the advice provider determined that the trustee was a wholesale client based on the general net assets test of $2.5 million applying to the individual. As a general rule this was taken to assume that the SMSF could be treated as a wholesale client.
However, in its decision AFCA pointed out that the Media Release 14-191MR is not a definitive statement by ASIC that the general wholesale client test applies to SMSF trustees in relation to financial services these trustees receive. In effect, the release relates to ASIC not taking action in the circumstances indicated in the Media Release.
The AFCA decision was recently confirmed by their lead ombudsman, Shail Singh, and in the AFCA newsletter dated 19 June 2025 that the Corporations Act treats everyone as a retail investor unless you fall into a category of wholesale.
Qualified accountants who have been asked to provide wholesale investor certificate for purposes of Chapter 7 of the Corporations Act must understand when it can be given for an SMSF and that the net value of the fund’s assets are calculated correctly.