SMSF TIMES – APRIL 2025
ELECTION EDITION
With the election campaigns well underway I thought it would be fun to analyse the superannuation policies of both major parties… just joking, that would be pretty boring even for me… but here’s a few election related things, and then some more important stuff:
Div 296 – UPDATE
The Div 296 bill has officially lapsed… however, if you read the budget papers from March (everyone reads the budget papers right?) you’ll notice that the revenue the government is expecting to book from Div 296 (the $3m tax) is still in there. This means that even though they have gone very quiet on it, it is still Labor policy.
SUPER FOR HOUSING
In their budget reply the Liberal Party announced a ‘super for housing’ policy. There’s little detail on the policy at this stage, but it will allow first home buyer to access up to $50,000 of their super for a home deposit. For the politically minded out there, this should be an interesting one because Labor legislated ‘the purpose of super’ during the last sitting period… I think part of the reason they did this was to put a barrier up against exactly this type of policy. There has a been a very long debate about what super is for – with the general consensus being it should be for your retirement. This is basically what was legislated, which will make it harder for the Liberal Party to get legislation that goes against this definition through parliament.
OK, enough about the election… there is a bunch of other stuff going on in super land which is really interesting (and somewhat frustrating/annoying).
HACKING / FRAUD RISK
You may have noticed that heaps of big super funds have been hacked recently. This has coincided with big market movements (like the ‘liberation day’ market turmoil). This makes it hard for industry super funds to identify and put holds on suspicious transactions (because these volatile situations are exactly when people panic and withdraw money from super). It seems as though the hackers are using compromised login details to access super accounts and request lump sum withdrawals (so if you are concerned, change your industry super fund log in details!).
This indicates a particularly good understanding of the Australian Superannuation rules (can I say impressive if I’m talking about fraudsters?… Probably not) because the fraudsters have been able to identify accounts that have unrestricted non preserved balances. Good news is that these types of frauds are extremely rare in SMSF land. This is one of the benefits of having an SMSF! If a fraudster sent you a lump sum withdrawal request you would just decline it! 😂
However, we are seeing an uptick in fraud taking place at the investment level. The industry has seen an increase in SMSF trustees investing in dodgy property developments or first mortgage loans to ‘property developers’ that have a history of ponzi schemes. There are few very reputable first mortgage loan providers out there. If someone you haven’t heard of is offering you a too good to be true deal, be very careful, or better still… just don’t do it… it’s not worth the risk. If you are still entertaining the idea – give us a call, we know a fair few of the dodgy providers and may be able to steer you to safety.
We have also seen some trustees targeted for investments in ‘off market investments’- the classic has been SpaceX. Just a warning – SpaceX shares are not for sale. The broker will usually say they have a large parcel off market and they can’t sell them but you can buy a portion from him and then it will be held beneficially. This is a scam. Then they say the investment has gone up considerably but to get the money out of the US you have to pay the tax on the increase first… thereby extracting even more money before you realise it’s a scam. If you see an investment that has any of these hallmarks, steer well clear.
AUDIT RISKS – VERY IMPORTANT
Very recently, through a combination of ATO activity (auditing the auditors) and the internal auditor risk reviews, auditors are now insisting SMSF trustees make a number of chances to standard practice. This is very important, because there is more risk than ever that your fund will receive an Auditor Contravention Report (ACR). You do NOT want an ACR. If you get an ACR there is a very good chance the ATO will want to audit your fund. If the ATO audit the fund and find breaches, the penalties can be severe (think $14,000+ per mistake!!) So, we need to make sure we are getting ahead of this and doing everything squeaky clean.
- ASSET VALUATIONS
The rule has always been that you need to value your assets (including property) at market value EVERY YEAR. Conventional wisdom has been that if assets were revalued in the last 3 years they were probably materially at market value, so up sprung the industry practice of getting valuations every three years.
This is one of the major areas the ATO focused on in auditing the auditors – and as such every auditor is now insisting on valuations every single year. This is obviously a major inconvenience and can be a considerable cost to you.
Valuations for related companies and unit trusts will need to have the underlying assets valued – which can be difficult / nigh on impossible – which may result in some ACRs… we will try and work this through with the auditors for these more exotic investments, but this will be felt most by SMSFs with property.
Hopefully your real estate agent can prepare a curbside valuation for free for you. You don’t need a sworn valuation – just a desktop appraisal on agent letterhead (or by email) is fine.
We have recently become aware of real estate agents charging $450 for residential appraisals and $850+ (up to $5000!!!) for commercial properties. Whilst we understand that this is a significant administrative burden for real estate agencies, we wanted to investigate alternative solutions for you – options that would both reduce your costs and reduce the amount of work you have to do.
OPTION 1: THE BEST
Ask your real estate agent to give you a free appraisal each year around 01 July. The benefit of this option is it’s free (the best!) but you will need to do the leg work liaising with the agent and getting us the appraisal.
OPTION 2: NOT AS GOOD
Residential: We can arrange residential valuations through Corelogic for $80 per property.
Commercial: In many cases we will be able to arrange commercial valuations through a local real estate agent. These will cost $350 + GST per property.
For both these options we will initiate the process and, in most cases, we will have everything needed to do the valuation. There may be some instances where you will still need to provide some info.
We will contact everyone in June that has a property and ask if you want to get your own valuations or if you want us to arrange valuations for you. We will just add the cost on to your normal invoice for the financials and tax return to make your life as easy as possible.
OPTION 3: WORSE
Arrange the valuation yourself and pay more than this.
OPTION 4: WORST
Don’t get a valuation, get an ACR, get ATO penalties. Gross.
- RELATED PARTY TRANSACTIONS
This is going to be massive going forward – the way you interact with related parties has to be the same way you would interact with an unrelated party.
RENTING TO YOURSELF – MAKE SURE YOU DO IT ACCORDING TO THE LEASE
If the lease agreement says you pay rent every month, pay it every month – don’t pay it annually. Make sure you pay the whole amount as well.
LOAN REPAYMENTS – PAY ACCORDING TO YOUR AMORTISATION SCHEDULE
If your SMSF has borrowed money from you, make sure the SMSF repays the loan according to the schedule – if the loan agreement says pay $1000 a month, do that – don’t pay $12,000 annually.
Ok that’s it for now… there will always be changes to super, but hopefully we can continue to try and find time efficient and cheap solutions for you to navigate the changes.
Actually, that’s not quite it… It seems as though my love for nerdy tech stuff is spreading, and Akshay wanted to tell you all about Wash Sales so… over to you Akshay…
WASH SALES – By Akshay R.
The ATO is warning taxpayers—especially those with shares or crypto—about wash sales. This is when someone sells an asset from one entity to another (for example, from their SMSF to their personal name – and vice versa) to use up previously crystallised losses in the selling entity. Another common tactic is to sell an investment or parcel of shares just before 30 June to lock in a capital loss, then quickly buy back the same investment or parcel of shares at the start of the new financial year. These strategies are often used to reduce capital gains and minimise tax, but the ATO sees them as tax avoidance and is cracking down. There was recently a significant landmark case in court about this: Merchant v Commissioner of Taxation & the ATO won.
What makes a wash sale different from normal investing is the intent. If you’re selling an asset and buying it back purely to use up the capital losses or create a tax/capital loss—not because of a real change in your investment strategy—that’s a red flag. The ATO uses advanced data matching to spot these patterns, and if they decide a transaction is a wash sale, they’ll cancel the loss and may hit you with extra tax, penalties and interest. This applies to trading both under your SMSF and your personal name.
For SMSF trustees, the message is simple: Always make sure your investment decisions are based on genuine reasons—not just tax savings. Remember the sole purpose test; everything you do in your SMSF has to be for the sole purpose of providing your members (that’s you!) benefits for retirement.
And don’t rely on tips from social media or forums. If you’re not sure, give us a call.
Ok that really is it now. Strap in for the rollercoaster ride that will be global markets for the next month or so.
Daniel
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