A panellist from the 2010 Cooper Review has said he is concerned at the rate of SMSF establishment and that inappropriate candidates for self-managed funds are becoming trustees.
Self-managed funds are best suited to funds with a balance “north of $500,000” and for those who have financial competencies to invest independently, Ian Martin, vice chairman, Asia Pacific, at Berkshire Capital told SMSF Adviser.
“I think SMSFs work for people with a certain threshold level of assets or people who are likely to get to a certain threshold level of assets within a reasonable timeframe,” Mr Martin said.
“There is an argument that [trustees] can use an adviser… but I think in general [SMSFs] are for people who have a reasonably high degree of literacy around financial matters and around the legal and accounting issues that running an SMSF necessarily involves,” he added.
“I think it’s overly simplistic to think that you can set one up and delegate it to somebody…without an understanding of the responsibilities of being a trustee.”
Mr Martin also recommended a review into borrowing as per the Cooper Review’s advice, drawing attention to “disconcerting” sales practices and anecdotal evidence that gearing into property has increased.
“It would be prudent for the authorities to go back and take a look at the Cooper Review recommendation and actually undertake that inquiry,” Mr Martin said.
“I’m not suggesting another Cooper Review, but I think for example the Treasury ought to be taking a look at the asset allocation numbers… and see how big an issue this is.”
“I personally think the sector would benefit from stability rather than constant change, but nonetheless, the reality is that from time to time situations change and new products develop, circumstances change and given that that’s the case… there are things that are prudent to look at.”
SUBSCRIBE TO THE SMSF ADVISER BULLETIN
- 26 Sep 2017ATO set to add new items to SMSF watch listBy Katarina Taurian
- 26 Sep 2017ATO tipped to scrutinise property development and unit trustsBy Jotham Lian
- 26 Sep 2017Statistics reveal full impact of events-based reportingBy Staff Reporter
- 26 Sep 2017Tax advice exemption discrepancy driving away accountantsBy Jotham Lian
- 26 Sep 2017Consultant flags strategies to negate complex ECPI calculationsBy Miranda Brownlee
- 25 Sep 2017Survey results point to major concerns with new reportingBy Miranda Brownlee
- view all
- ATO tipped to scrutinise property development and unit trusts
One big four accounting firm says the ATO has started to zoom in on property development in unit trusts being held in SMSFs and the calculat...read more
- Statistics reveal full impact of events-based reporting
Analysis conducted by SMSF software provider BGL Corporate Solutions has indicated that around 290,000 SMSFs will be affected by the events-...read more
- Tax advice exemption discrepancy driving away accountants
A discrepancy in ASIC’s treatment of licensed and unlicensed accountants in relation to the tax advice exemption instrument is driving acc...read more
- view all