Significantly fewer self-managed superannuation funds (SMSFs) are breaching the rules and being reported to the Australian Taxation Office (ATO), according to new data released by SMSF specialist Partner’s Group.
The data, the product of the Partners Group annual survey of SMSF clients, found that only 3.4 per cent of funds in the survey sample had a contravention report forwarded to the ATO, which represented just 30 per cent of the number of funds which had been reported for breaches two years ago.
However, the reasons for those breaches remain pretty much the same and related to the holding of in-house assets and loans to members.
Commenting on the survey data, Partners Group director Martin Murden said the company believed the continued decline in breaches was due to past breaches being rectified and trustees becoming more aware of the need to comply with legislation.
He said trustees would also be aware of the increasing number of SMSFs on which the ATO had imposed penalties for breaches of legislation.
Another major finding of the survey was that there had been a pick-up in the number of SMSFs paying a pension or transition to retirement income stream.
Murden said that in only two years the percentage of funds paying pensions had doubled to 30 per cent — something that was to be expected given an ageing population.
However, he said that over half of the funds paying a pension were due to one or more members of the fund making use of the transition to retirement rules.
The data also revealed that the average size of the SMSFs covered in the survey had increased by only 6.6 per cent to $729,061, although 25 per cent of the funds had more than $1 million in assets compared with just 15 per cent two years ago.
The survey also revealed that while the majority of SMSF investment was directed towards shares, listed trusts, property and cash, there had been a decline in the amount invested in shares and listed trusts while property was continuing to grow as a portion of SMSF allocations, albeit slowly.
