The Australian Taxation Office (ATO) has poured cold water on the rumors of self-managed superannuation funds (SMSF) being pitched at younger investors and that SMSF trustees are moving heavily into residential property according to the SMSF Professionals' Association of Australia (SPAA).
SPAA Director of Technical and Professional Standards Graeme Colley said the ATO's release of its Self-managed super fund statistical report — September 2014 showed a decline in the number of funds with less than $150,000, typically held by younger trustees, over the past four years.
This group of SMSFs dropped from 20.5 per cent to 17.2 per cent of the SMSF sector while funds between $200,000 and $2 million grew from 63.9 per cent to 65.7 per cent over the past four years.
Colley said SPAA was supportive of younger people having the choice of using an SMSF if it was suitable and opposed any artificial barriers to entry to an SMSF "but the notion in some industry circles that young, naïve people are being ‘enticed' into SMSFs in increasing numbers is simply not borne out by the figures".
He also said the ATO figures showed that SMSFs with low balances did not have an high concentration of their assets in residential property, with the percentage of residential property assets in funds with less than $50,000 still below one per cent.
In 2010 this figure was at 0.33 per cent and had only climbed to 0.7 per cent in 2013 with Colley stating that typically it was funds with assets between $200,000 and $2 million that were the major investors in residential property.
However even this sector has not rushed into property with the average weighting to residential property being 4.2 per cent of all assets in 2010 with only a marginal rise in the past four years to 4.3 per cent by 2013.
"The notion that SMSFs are piling into residential property with their ears pinned back is simply not supported by the ATO figures," Colley said.
He also stated the SMSF sector continued to grow over the year to the end of the September quarter with 20,173 new funds established and their growth, particularly in the older age groups, demonstrated that SMSFs were being used by pre and post-retirees to draw down savings and create pension streams.
