Peter Burgess, CEO, SMSF Association
Uncertainty surrounding Division 296 cast a shadow over the sector for much of 2025. The lack of clarity about its commencement date and whether it would be amended before passage made it difficult for advisers to provide clear guidance to clients.
Liam Shorte, director, SONAS Wealth
The large increase in those requiring advice to set up new funds and those seeking retirement and Div 296 advice but lower numbers of SMSF specialist advisers with financial planning licences available.
The SMSF Association did a great job and over 300 new SSA’s were accredited in the last 12 months but we need more of those to be from the financial planning profession to deal with the growing advice needs.
Any adviser who declares themselves to be an holistic adviser is doing their clients a disservice if they do not have expertise in SMSFs, even if that is to tell clients that it is not the right option for them.
David Busoli, principal, SMSF Alliance
The biggest challenge was the uncertainty surrounding the proposed Div 296 tax. Its ongoing discussion created widespread consternation including for those who had no chance of being affected. It was closely followed, though not as overtly, by heightened regulatory scrutiny which has required the sector to tighten its governance standards.
Meg Heffron, director, Heffron
I would say there were two – dealing with a lot of uncertainty around Div 296 tax and a significant change in the way in which the ATO approaches the underpayment of pensions.
The Div 296 tax uncertainty was challenging in that even in early 2025/26, clients still weren’t sure whether they would be taxed on unrealised gains during that year. Tax change is inevitable but not being able to plan sensibly for it in an environment where the rules are clear is completely unreasonable.
The pensions issue was one of those extremely challenging situations where we discovered the way the industry dealt with underpayments was in some respects very out of kilter with the way the ATO felt we should have been doing things. In particular, the ATO published their view that a failed pension would never be entitled to ECPI again – and would have to be formally commuted and re-started in order to come back into the fold. In contrast, the widespread industry approach was to simply “restart” ECPI in the subsequent year (assuming the trustee met the pension requirements in the following year).
While the ATO offered some quasi relief in that they confirmed they wouldn’t actively look for breaches in the past, there were definitely some people that were significantly impacted by the new approach. In particular, people who requested special permission to disregard an underpayment in 2023/24 unwittingly sacrificed that “no compliance activity” relief by bringing their fund to the attention of the regulator.
Naz Randeria, director, Reliance Auditing Services
In 2025, the SMSF sector’s biggest challenge was the looming Div 296 tax, with the industry striving to demonstrate to the Treasurer why taxing unrealised gains remains counterproductive for long-term retirement planning, while helping trustees gain clearer insight into how these changes could influence their long-term financial outcomes.
Shelley Banton, director, Super Clarity
The biggest issue for the SMSF sector is the ongoing regulatory changes and increased scrutiny, which are at an all-time high.
We have seen the ATO focusing its efforts on asset valuations, in-house assets, reporting and trustee declarations, which have created more record-keeping and compliance obligations than ever before for all SMSF professionals.
Additionally, the new pressures from Div 296 and NALI have significantly increased the complexity of tax and estate planning.
Another notable challenge faced by the SMSF sector in 2025 has been the extremely short consultation periods offered by Treasury and the government on major SMSF legislative changes. These abbreviated timeframes have limited stakeholders’ ability to provide thorough, meaningful feedback on new regulations.
It has also reduced the SMSF sector’s opportunity to prepare for the implementation of significant legislative changes and has added to the compliance burden. The situation has heightened the difficulty for SMSF professionals and trustees to remain proactive and adequately informed amid rapidly evolving requirements.
Nicholas Ali, head of SMSF technical services, Neo Super
I think the biggest challenge is the rapid growth in the number of SMSFs in the last two years (33,000 in FY 2024 and a whopping 42,000 in FY 2025). This has led to stricter compliance requirements from the Australian Taxation Office (ATO) and the Australian Securities and Investments Commission (ASIC), who are focusing more on governance and audit standards.
And the ATO is reviewing auditors more rigorously, which means we are seeing greater auditor scrutiny of SMSFs, ensuring assets are valued at market rates with proper evidence. Managing the growth in the sector and ensuring SMSFs are being established for the right reasons provides the sector’s greatest challenge, but also the greatest opportunities too.
