ATO reveals true nature of SMSF trustees

The Australian Taxation Office (ATO) has revealed more about what is driving people to establish self-managed superannuation funds (SMSF), having announced the results of discussions it has held with over 800 trustees.

According to the feedback delivered to the ATO, while ‘control over retirement investments’ remains one of the key reasons for establishing a SMSF, the Government’s so-called ‘simpler super’ changes also acted as a catalyst for the establishment of SMSFs.

The ATO data revealed that 40 per cent of trustees cited ‘control’ as being an issue, while almost 50 per cent cited the simpler superannuation changes as influencing their decision.

But what should be of importance to financial planners and accountants is the fact that 93 per cent of trustees said they had sought and received professional advice in setting up their SMSF, with 80 per cent saying they used accountants, tax agents or financial advisers.

The ATO data also revealed that 50 per cent of funds held in newly-established SMSFs had been sourced from retail and industry funds, while 15 per cent of trustees said they had held no superannuation accounts before creating their SMSF.

Consistent with other research into SMSFs, the ATO data suggested that around 70 per cent of assets held in SMSFs were in cash or listed and unlisted shares.

Another important marker to emerge from the data was that around 50 per cent of those who had set up a SMSF regarded themselves as ‘knowledgeable’ while around 20 per cent regarded themselves as having low to medium knowledge.

The ATO said that around one-third of trustees were unable to explain the sole purpose test and approximately 20 per cent did not have an investment strategy.