A fact sheet released by the corporate regulator highlighted it would cost members $13,900 to operate a self-managed super fund, as well as a 100-hours-a-year time commitment.
The ATO has refined these figures, showing operating expenses are closer to $3,923 a year.
SMSF Association chief executive John Maroney has welcomed a far more realistic assessment of what it costs to run an SMSF fund.
“We have been encouraging the ATO to publish more granular expense data and are extremely supportive of the updated data that has now been released,” he said.
Mr Maroney highlighted the analysis used for the ASIC fact sheet relied on the use of averages that ignored the significant distortion caused by large SMSFs and funds choosing to use borrowings and buy extensive administrative insurance and investment services.
“High total average expense figures have not reflected the reality of the typical SMSF, and we acknowledge the ATO’s willingness to listen to our concerns and to present the data in a more transparent and meaningful way,” he said.
The CEO explained that it has always been difficult to clearly determine the basic operating expenses of an SMSF due to these larger funds.
“This was recently highlighted in an ASIC SMSF fact sheet that we believe was well intended to help people consider whether an SMSF was a suitable choice for them, but lacked balance and would have benefited from more context about optional expense components,” Mr Maroney continued.
Mr Maroney believes the ATO’s views are fairer due to its fact sheet tables, breaking down costs using median and average expenses by type of funds, as well as streamlining operating expenses to include auditor fees, management and administration expenses, other amounts and the SMSF supervisory levy.
“What these revised tables clearly show is how SMSFs exceeding $2 million had a significant impact on the weighting of the costs allocated to an average figure. In addition, the impacts of expenses such as investment expenses, insurance and interest on investment borrowings were attributed to the average when many SMSFs choose not to use these services,” he said.
“The data allows us to take a fund with a typical establishment balance of between $200,000 and $500,000 and, if we only include the basic operating expenses, we can estimate the median operating expense to be around $3,400 for these SMSFs.”
Mr Maroney added that the overview paints a healthy picture of the SMSF sector, with an average investment return of 7.5 per cent compared with the 8.5 per cent return for the APRA funds, maintaining the strong run of positive returns by SMSFs and the continuing comparable performance with APRA-regulated super funds.
I will be working within the same tolerances when I deal with ASIC nowadays. If I am out by less than 350%, I will treat the matter as negligible. Awesome!
ASIC chairman should be dealt with in the same manner as the principal of any Financial Planning practice who knowingly puts up false and misleading statements on their website.
Anonymous It is unacceptable that ASIC should get away with this.
Time for groups like SMSF Assoc, CPA, CA, NTAA etc to write a unified letter to both ASIC and the current Liberal Gov, demanding the ASIC SMSF Lie Sheet be retracted and official media release apologies be released to all major media outlets. This is intolerable and as per the above comments, was deliberate by ASIC.
Also SMSFAdviser, why do the voting buttons on comments never work since inception of this publication?
If an adviser had made such a big misleading claim ASIC would have taken taken the adviser out of the system. If you rule by a sword you need to fall on your sword or the organisation is a joke. Time to resign for misleading the public Danielle Press.
A refinement is not more than 70%. This is another example of ASIC deliberately distorting figures to support their unfounded opinions. Get rid of them and start again as they have shown in numerous reports to be incapable of telling the truth.
.Finally we see some sensible comparisons, these new figures will encourage in my view, moving away from the large Funds and set up one’s own for better control and sensible expenses not bloated costs.
And ASIC still slug ADVISERS via extra Cost Recovery Expenses for the absolute BS of producing this totally misleading SMSF “DONT DO IT MISGUIDE”.
ASIC – please retract the initial false guide. You know it was a complete misrepresentation.
ASIC – please delete this stupid cost from Adviser cost recovery expenses.
What a Left wing, Industry Fund loving regulator we have that completely misleads the truth about SMSF’s.