Highlights

  • The national auditor is examining how the ATO regulates self-managed super funds, with public submissions closed on 25 October.
  • The SMSF Association asks whether the ATO exceeded its legislative remit by challenging SMSF investment strategies, citing a 2019 campaign.
  • Government plans for upfront checks on new SMSFs, announced in August 2026, remain a proposal and are not yet legislated.
  • SMSFs now number 680,301, with members holding estimated assets of $1.107 trillion in the June 2026 quarter.

"Clear, timely guidance is a frontline compliance tool." So says SMSF Association CEO Peter Burgess, and the line sums up why the sector is watching the Australian National Audit Office so closely. The ANAO is examining how the ATO regulates self-managed super funds, and the Association has used the audit to ask a pointed question: has the tax office drifted beyond its legal remit? Submissions closed on Sunday 25 October. With new upfront checks on new funds announced but not yet legislated, the answer matters to hundreds of thousands of trustees.

What the auditor is examining

The performance audit is titled "Australian Taxation Office's regulation of self-managed superannuation funds". It is at the evidence-gathering stage, and public contributions were accepted until 25 October 2026. Its criteria cover whether the ATO manages SMSF risks, ensures compliance and sanctions non-compliant funds.

The ANAO has given no tabling date, and its findings are recommendations to the agency, not binding law.

The ATO's toolkit is broad. It registers new SMSFs, receives each fund's annual return, and relies on independent approved auditors who must report certain breaches. Responses range from education to penalties, disqualifying trustees and, in serious cases, making a fund non-complying.

The Association's case: firm, within the law

In its submission, the SMSF Association said it wants regulation that is "firm where it needs to be, practical in its administration". It says the last review of this kind was in 2007 and the ATO has shifted from an educative role to an actively regulatory one.

It wants the ANAO to test whether the ATO's approach is risk-based, proportionate, transparent and timely, including its reliance on non-binding web content and whether SMSF-specific rulings are current.

Its sharpest argument concerns investment strategies. The Association cites the ATO's 2019 campaign aimed at about 17,700 SMSFs with concentrated investments, and says SIS regulation 4.09 requires trustees to consider diversification but not to diversify. It also asks whether blocking new SMSFs on "appropriateness" grounds would be the same kind of overreach, a drift towards "de facto prudential supervision".

APRA supervises the trustees of large funds, while the ATO regulates SMSFs, whose members are generally also their trustees.

The proposed upfront checks

The debate gained weight from a Government announcement in August 2026. The plan would require a written investment strategy upfront and give powers to delay SMSF registration and restrict rollovers while checks are carried out.

It is a proposal only, and detail could change before any bill reaches Parliament. Supporters see a way to stop people being pushed into unsuitable funds, while the Association worries that judging "appropriateness" could stretch the ATO into assessing investment merit instead of legal compliance.

A hypothetical concentration test

Suppose an SMSF holds $1.7 million, matching the ATO's 2024–25 average per fund. Of that, 90%, or $1,530,000, sits in a single commercial property, with $170,000 in cash.

Under SIS regulation 4.09, trustees must consider diversification and the risks of that concentration when setting and reviewing their strategy. On the Association's reading, nothing stops them keeping the property if they have genuinely considered those matters and recorded their reasoning. The question it wants tested is how far the ATO can go in challenging such a strategy. The example is simplified and not a view on any real strategy.

The sector in numbers

The ATO's June 2026 quarterly statistics, published on 8 September, count 680,301 SMSFs with 1,246,552 members. Listed shares are the largest asset class at 26%, and 74% of members are aged 50 or older.

The 2024–25 annual data show average assets of $1.7 million per fund.

The Association also raised the burden of small, unintentional breaches, such as a late annual return.