The SMSF Professionals’ Association of Australia has claimed the latest tax office statistics further disprove many criticisms of the SMSF sector, such as young people being inappropriately enticed to establish this type of fund, the volume of allocations to residential property and the overuse of gearing.
The Australian Taxation Office’s (ATO) “Self-managed super fund statistical report – September 2014” revealed 65.7 per cent of individuals setting up SMSFs in 2012/13 had asset balances between $200,000 and $2 million.
That proportion had increased from 2009/10 when 63.9 per cent of people establishing SMSFs were found to be in that funds under management band.
“SPAA strongly believes younger people who want to take direct control of their retirement savings should still be encouraged to do so and remains resolutely opposed to any artificial barriers to entry to an SMSF,” SPAA director of technical and professional standards Graeme Colley said.
“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.”
The statistics also showed allocations to residential property had only risen slightly for people with balances less than $50,000, increasing from 0.33 per cent in 2010 to 0.7 per cent in 2013.
Colley said that demonstrated there were no alarming allocations by SMSFs to the asset class.
“Once again it is the funds with assets between $200,000 and $2 million that have the biggest attraction to residential property, with average weightings of 4.2 per cent of all assets in 2010, a figure that has only risen to 4.3 per cent by 2013,” he said.
“The notion that SMSFs are piling into residential property with their ears pinned back is simply not supported by the ATO figures.”
He described the figures relating to assets acquired under a limited recourse borrowing arrangement (LRBA) as reassuring and suggested the Financial System Inquiry, which had raised its concerns over the issue, should take notice of those statistics.
“In the three months from March 2013 to June 2013, LRBAs nearly trebled, largely due to a reconfiguring by the ATO on how it measures LRBA assets, from $2.6 billion to $8.7 billion, but for the past 15 months to 30 September 2014, the latter figure has only moved to $9.2 billion for the June-September 2014 quarter – hardly an implosion of LRBAs,” he said.
