SMSF wind-ups lowest on record

SMSF wind-ups

Wind-ups of SMSFs fell to previously unseen lows in the 2020 financial year, resulting in a much higher number of net establishments compared to 2019, the ATO’s latest statistics reveal.

The number of SMSF wind-ups for the 2020 financial year fell drastically compared to previous years, the latest ATO statistics have revealed.

According to the ATO’s statistical overview of the SMSF sector for the June quarter, wind-ups of SMSFs fell to 2763 during 2019/20, compared to 15,677 in the 2019 financial year.

While the number of SMSF establishments remained largely consistent with previous years, the drop in SMSF wind-ups resulted in 18,540 net establishments for 2019/20, a significantly higher number compared to the 4694 net establishments the previous year.

The decrease in the number of wind-ups for the June quarter alone, 204 compared to 917 in in the March quarter, was especially noteworthy given the high number of wind-ups that usually occur at the end of each financial year. By comparison, the number of wind-ups for the June quarter in 2019 was 11,748.

“Generally, we receive notifications of wind-ups as at the end of the financial year. This means the June quarters show significantly higher numbers of wind-ups than other quarters,” the regulator noted.

As part of the ATO’s annual reporting on the SMSF sector in June, the regulator found the level of SMSF wind-ups reached a record high during the 2018 financial year, while new establishments dropped away.

The report also revealed asset allocations among SMSFs for the June quarter either remained more or less consistent with the March quarter or returned to previous levels following a dip in March most likely caused by the economic impact of the COVID-19 pandemic.

In particular, investment in unlisted trusts jumped to $85.7 million after a drop of over $10 million to $79.5 million during the March quarter. Investment in listed shares also climbed back up to $191.5 million in the June quarter, following a fall in the March quarter to $165.3 million from $217.1 million in the December quarter.

In September, the “2020 Vanguard/Investment Trends SMSF Investor and Planner Report” revealed SMSF members were more focused than ever before on maximising capital growth to rebuild their fund’s investment portfolio after the negative effect of the coronavirus pandemic on markets.

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