SMSF sector continues steady expansion

The latest ATO data revealed that there are currently 593,000 SMSFs holding $733 billion in total assets, with more than 1.1 million SMSF members, as of 30 June 2020.

As of 30 June 2020, there were over 593,000 SMSFs, an increase of 3 per cent on the previous year and an increase of 11 per cent over the five years from 2015–16, according to the report.

In the five years to 2019–20, the number of SMSFs grew by an annual average of 2.1 per cent while an average of 26,000 new funds were established annually (almost 2,200 per month), with a declining trend from 33,000 establishments in 2015–16 to 21,000 in 2019–20 (-35 per cent).

Approximately 15,700 SMSFs were wound up in 2018–19, compared with an annual average of 14,100 for the five years to 2018–19. Furthermore, 55 per cent of SMSFs have also existed for more than 10 years.

The ATO data revealed that there were an estimated 5,000 auditors used to meet SMSF tax and regulatory obligations, which has seen a decrease compared with 5,300 in the previous year. Meanwhile, tax agents have increased from 13,700 in 2017–18 to 14,100 in 2018–19. 

“Forty-nine per cent of SMSF auditors performed five to 50 SMSF audits and 28 per cent of SMSF auditors performed 51 to 250 audits,” the ATO stated.

“Six per cent of SMSF auditors conducted more than 250 audits, representing 54 per cent of total SMSF audits.”

The ATO said the average audit fee was $686 and the median audit fee was $550. 

Furthermore, 99 per cent of SMSFs used a tax agent to lodge their 2018–19 SMSF annual return. For these agents, the average number of SMSF clients was 32 and the median was 10.

The ATO report found that there are now over 1.1 million SMSF members, with 47 per cent female and 53 per cent males as of June 2019. Corporate trustees make up 63 per cent of the recorded trustees in SMSFs while individual trustees make up 37 per cent. 

“The median age of all SMSF members as of June 2020 is 61 years while the median age of members of newly established funds in 2018–19 is 46 years old,” the ATO said.

“Meanwhile, the average member balance for females increased by 28 per cent over the five years to 2018–19, while the average balance for males increased by 22 per cent over the same period.”

Shifts in assets and contributions 

The ATO figures revealed that as of 30 June 2020, SMSF assets totalled $733.1 billion. This represents an increase of $135.4 billion, or 23 per cent, in the five years to 30 June 2020.

However, in the 12 months from the 2019 to the 2020 financial year, SMSF assets fell by $15.9 billion, or 2 per cent. 

“This is likely due to the effect of COVID-19 on both the Australian share and property markets where SMSFs hold substantial assets,” the ATO said.

The top five assets held by SMSFs as of 30 June 2019 (by value) that make up 76 per cent of total SMSF assets include listed shares (29 per cent), cash and term deposits (21 per cent), unlisted trusts (11 per cent), non-residential real property (9 per cent) and limited recourse borrowing arrangements (6 per cent).

“Over the five years to 2018–19, average assets per fund increased by 22 per cent to $1.3 million and average assets per member increased by 23 per cent to $701,000,” the ATO noted.

“Forty-seven per cent of SMSFs had assets between $200,001 and $1 million. This accounts for 20 per cent of the total SMSF assets.”

Meanwhile, SMSFs achieved positive returns for the past five years with a 6.8 per cent estimated return on assets, according to the ATO.

Average assets per fund in the year of establishment have also increased by 11 per cent to $417,000 (from 2014–15 to 2018–19).

In terms of assets in the accumulation and retirement phases, the ATO revealed there was a 2 per cent change in SMSF assets in either retirement (65 per cent) or accumulation (35 per cent) phase from 2017–18 to 2018–19.

In 2018–19, 55 per cent of SMSFs were wholly in accumulation phase, down from 58 per cent in 2017–18, and up from 54 per cent in 2014–15, while 35 per cent were wholly in retirement phase, up from 33 per cent in 2017–18, and consistent with 2014–15. The remaining 10 per cent of SMSFs were in partial accumulation and retirement phase, up from 9 per cent in 2017–18, and down from 11 per cent in 2014–15.

On 30 June 2019, the ATO recorded that 10 per cent of members had an SMSF closing account balance over $1.6 million, which is an increase of 1 per cent from 2017–18. 

“$17.4 billion were estimated in SMSF contributions which makes up 13 per cent of all super contributions,” the ATO said.

“This is a 2 per cent increase from 2018 to 2019 financial year and a 44 per cent increase in the five-year period spanning 2015–2019.”

Meanwhile, SMSF benefit payments saw an increase of up to $35.8 billion, which makes up 34 per cent of SMSF members receiving benefit payments for the 2019–20 year. This is a 7 per cent increase from 2018–19 financial year and a 9 per cent increase overall in the five-year period from 2015–19. 

Furthermore, the ATO reported that up to 9 per cent of SMSF benefits paid were transition to retirement (TRIS).

“Over the five years to 30 June 2019, there was an overall net outflow of funds from SMSFs of $45.5 billion,” the ATO said.

“This was mainly due to significantly higher benefit payments against contributions in both the 2017–18 and 2018–19 years.”