According to the recently-released ATO data, there were 5,840 SMSFs established in the March quarter – fewer than any quarter as far back as the data stretches, to the June 2008 quarter.
In his latest Trialogue update, Tria managing partner Andrew Baker said the financial media’s ‘breathless’ reporting attributing the decline to government tinkering failed to take into account the lack of certainty around the numbers.
Nobody knows for sure if those numbers are accurate, including the ATO, according to Baker.
“That’s because the numbers the quarterly reports are based on are just estimates, based on data which is most likely nearly two years old,” he wrote.
He pointed out that the ATO publication clearly stated the numbers are estimates, but added the ATO should do more to highlight that fact, as well as the limitations of the data, and that it should be used carefully – if at all.
“Frankly we don’t know why the ATO bothers with publishing quarterly data, given its outputs could be criticised as being anywhere between heroic and misleading. Gospel it is not,” Baker said.
“The facts are that there is only one really useful and representative source of truth when it comes to SMSF data, and that is SMSF annual tax returns.”
Even those returns are lacking in terms of capturing a “broad swathe” of SMSF data, especially around things like asset exposures, according to Baker.
He also pointed to the significant time lag involved with lodging of the annual tax returns upon which the ATO relies for its data, with returns due in May for the prior June end of financial year. This leads to an adjustment in August, more than a year after the financial year end.
“So the idea that that ATO is publishing accurate March 2013 SMSF data is simply preposterous. It’s probably still based on June 2011 data at the moment,” Baker said.
Constant Government “tinkering” along with managed funds now offering much better investment choices will no doubt have a negative effect on SMSF numbers, wether the stats are rubbish or not.
Andrew is absolutely spot on.
A tip in relation to the ATO statistics – you should pretty much ignore the initial numbers. An SMSF Trustee has 60 days to lodge the election form with the ATO so there is always a lag. For example the SMSF establishments for the Dec2012 quarter were initially reported as 7,014 this has been upgraded to 9,748 funds in the latest report. Similarly SMSF establishments for Mar 2012 were reported as 7,152 funds and this is now stated as 9,863 funds.
Long term statistics are a better guide. Fund establishments for the last 4 calendar years are now reported as –
2009 – 30,307
2010 – 31,703
2011 – 36,359
2012 – 42,687
So are the numbers declining?