Analysis of FY24 Class tax return data shows that approximately 18,200 Class members could be affected, facing an average liability of $51,700.
The report said this equates to a potential total tax liability of $940.9 million for Class members only, up from previous market data estimates of $825 million, indicating that SMSFs overall are likely to contribute significantly to the government’s projected $2.3 billion in tax revenue during the first year.
It continued that given the S&P/ASX 200 increased by 10.2 per cent during FY25, with one in four SMSFs holding more than 27.5 per cent of their portfolio in domestic shares, a greater proportion of SMSFs could potentially exceed the $3 million threshold.
The report indicated that direct property remains popular, but said there also seemed to be some movement in the asset class in response to the proposed Div 296 tax.
Around 30 per cent of Class SMSFs held direct property investments in FY25, valued at approximately $74.0 billion.
Property allocations decreased slightly in FY25, down 1.1 per cent, and the proportion of SMSFs that held property decreased by 0.9 per cent. This could be due to trustees reducing exposure to direct property ahead of potential Div 296 changes.
The report identified 6.7 per cent of SMSFs impacted by Div 296 as having insufficient liquidity to meet their liabilities, up from 5 per cent in 2024.
Residential property remains dominant, accounting for around half of a fund’s assets (whether held outright or with a Limited Recourse Borrowing Arrangement), versus about one-third for funds holding commercial property.
Around one in four property investments in Class SMSFs were funded through LRBAs, with about 92 per cent of LRBAs tied to residential property. This could imply that SMSFs are being considered by younger Australians as a pathway into the housing market at a time when affordability remains a national challenge.
The report showed there was record SMSF growth in the past 12 months despite the uncertainty around the proposed Div 296 tax.
As at 30 June 2025, the number of SMSFs industry-wide reached a record 653,062, with total assets surpassing $1.05 trillion, underscoring the enduring appeal of SMSFs as a flexible solution for Australians seeking greater control of their retirement outcomes.
In FY25, SMSF establishments increased to 6.4 per cent, with approximately 42,000 new funds – the strongest growth since FY17.
Class chief executive Tim Steele said the findings from the Benchmark Report showcase how strongly SMSFs are resonating with Australians.
“SMSFs continue to attract a broadening range of Australians who want flexibility, choice, and control in how they save for their retirement. This growth demonstrates the sector’s resilience and its ability to evolve in line with members’ needs, even as the regulatory landscape shifts,” Steele said.
Data from the Annual Benchmark Report showed SMSFs were proving increasingly attractive to younger Australians. Generation X (45–59) led the way in FY25, accounting for 49 per cent of new establishments, while Millennials (30–44) followed at 37.3 per cent, reflecting their growing engagement with wealth creation and the flexibility SMSFs offer.
For Class, the average age of new SMSF members was 48 years, compared with 61.6 years for all SMSF members. At the same time, the average starting balance for new funds decreased by 29.4 per cent, from $515,000 to $363,000, indicating SMSFs became more accessible to Australians with more modest balances, and were being established earlier in their retirement journey.
While younger Australians are increasingly establishing SMSFs, the report showed that older SMSF members were far more likely to transition from accumulation to retirement income streams than members of APRA-regulated funds.
Class SMSF members aged 60 to 64 were more than twice as likely to start either a transition to retirement income stream or retirement phase income stream than APRA fund members. With 93 per cent of Class SMSF members over the age of 65 in retirement phase compared with just 49.2 per cent of APRA fund members, and typically holding higher balances at this stage, the findings reinforced the need for strategic planning to maximise tax savings and retirement income.
Moreover, the report showed SMSFs are delivering as a long-term solution for Australians. The average SMSF on Class has been established for 15.6 years in FY25, with 66 per cent of funds operating for over a decade.
Currently, the average SMSF fund balance is almost $1.9 million, and the average member balance is $990,000, highlighting SMSFs as an effective solution for long-term wealth accumulation.
Steele added: “SMSFs are not short-term experiments, they are a strategic solution for long-term wealth creation and increasingly are a cornerstone of retirement planning in Australia.”
