The events that had the most impact on SMSFs in 2023

Rather than any “big bang” things, I think there were two quite profound changes that occurred this year which will continue to reverberate. In my opinion, both are good things, but they will be felt as an irritation.

The first was the new ID checking rules imposed by the TPB from 1 July 2023 and then more recently by the ATO as part of client-to-agent linking (from November 2023).

I think these are good things, but they are going to make life tougher and will particularly impact older clients who are less comfortable with technology since proof of identity increasingly relies on technology solutions.

They will impact very few clients immediately but over time they will impact most clients eventually as they move to new providers or change things about their fund that prompt an ID check.

The second big change was the steady increases in auditor requirements – auditors largely reacted to cases and ATO interest, and hence asked increasingly searching questions about asset valuations, proof of existence, and evidence of arm’s length transactions. Again, this isn’t new, it’s just a steadily increasing focus by auditors.

Grant Abbott, LightYear Group chair, director, and founder

The biggest event to impact the SMSF space in 2023 is the $3 million accruals tax. It's quite aggressive because it's based on crude gains and not realised gains and that's quite a dynamic change to the taxation policy. It's a very scary precedent.

One of the other big ones is the Quality of Advice Review. It's quite obvious that the Labor government is getting the industry funds to be able to give advice.

The other one that I think is also important is crypto, which was utilised quite a bit in SMSFs and it's now getting a lot more requirements from the ATO for documentation.

Fatuma Akalo, financial adviser at Wattle Partners

The $3 million cap and additional taxation of unrealised gains continue to stand out as somewhat of a furphy. The popularity of SMSFs was a highlight, as more young people become engaged with their super balances.

Shelley Banton

Firstly, the carving out of APRA funds from the general expense NALI draft legislation shows the government’s negative impact on SMSFs.

Secondly, the release of the proposed $3 million super tax surprised everyone and it wasn't the concept of SMSFs with higher balances paying more tax that blindsided the industry. It was how Treasury re-engineered the definition of earnings on unrealised gains because it is blatantly unfair and unprecedented in tax law.

Lastly, the government has purposefully set extremely short consultation periods for all critical legislation in 2023. This is designed to stop the SMSF industry from fully understanding the complexities of the impending changes and providing relevant and detailed feedback.

Aaron Dunn, CEO, Smarter SMSF

The biggest events to impact the SMSF space and 2023 were quite clearly the Division 296 rules so this additional tax for individuals with balances above $3 million is the real big-ticket item, it's a new tax.

Again, Labor said that they wouldn't introduce any new taxes in this term, which is why we've seen that 1 July 2025 start date. We are naturally going to see a lot of SMSFs that are impacted by this and have to work through the relevant issues of the non-arms length expenditure rules. I think there's been a lot of discussion in terms of getting this resolved. It appears that we now have finally landed on how we'll move forward.

The other two that stand out for me are the fact that from an SMSF reporting point of view, the transfer balance account reporting from 1 July 2023 moved to a quarterly reporting framework.

Again, we had since the introduction of these measures on 1 July 2018, this two-tiered model, and now moving on to a more regular reporting model where we have events so that quarterly change is quite significant. It will need to ensure that practitioners are keeping that fund information up to date so that it can be adequately reported within the prescribed timeframes. Again, we may see the ATO move from educator to enforcer around that at some point in time.

The final one, I think, of the big issues was the inflationary impact, for example, the increase in the transfer balance cap. We didn't see a $100,000 increment, we saw it go from $1.7 million to $1.9 million and naturally that had an impact on a range of strategies, not only those starting pensions. We saw that deferral to 1 July to get the $200,000 increment, but we then also saw that in terms of making non-concessional contributions as well.

Michael Hallinan, special counsel, SUPERCentral

The announcement of the Better Targeted Superannuation changes – Division 296 Tax. Then the release of the Discussion Paper on the ‘Retirement Phase of Superannuation’. The first will cause many advisers and their clients to consider moving large real estate assets out of SMSFs. The second may be used to justify SMSFs not being involved in the provision of retirement income streams as SMSFs are too small to create pooled income streams.

A lesser impact would be the removal of the ability of SMSFs to issue Special Purpose Financial Statements rather than General Purpose financial statements – some SMSFs may be required to issue General Purpose Financial Statements which will most likely be significantly more expensive for almost no additional benefit to the users of the statements – such as the members and the ATO.