APRA is better suited to regulate SMSFs than the ATO, according to a financial services analyst.
The ATO is not adequately set up to manage SMSFs and ensure their continuing compliance, Wealth Within chief analyst Dale Gillham said.
“The ATO is not built for that purpose. SMSFs are the fastest growing sector of the market. How are they going to keep up with that? They’re not,” Mr Gillham said.
“APRA is already designed to [regulate] anyway,” he added. “To me, it’s just a natural fit that they should be doing it rather than the ATO, which is supposed to be looking after tax.”
Mr Gillham also said education for prospective SMSF trustees should be compulsory, to ensure suitability of the fund for their circumstances.
“When you [see] at least half of the investments in SMSFs on average are in shares, that says to me that people need to be educated,” he said.
Increased interest in limited recourse borrowing arrangements and property investment within SMSFs also heightens the need for mandatory trustee education, Mr Gillham added.
“Now that property has become bigger in terms of buying for SMSFs, [education] has become more critical, because that’s a huge mistake if you get that wrong.”
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