- Overall annual report again shows sector operating well
- Some will easily miss the key data tables
- Some estimated 2018/19 data also included in ATO report
The ATO have released the SMSF annual data for the 17/18 financial year.
Whole-of-sector data probably of limited value
Each SMSF is unique. There are similarities that one SMSF will have with many other funds. But as we know every fund, much like every family or small business, will have important attributes that only it has.
We talk about SMSFs in global terms because it gives us some important insights – such as the total number of funds or assets under management. But once we go beyond these data points I think looking at global SMSF data is interesting but I remain unconvinced about its usefulness and applicability to the sector.
SMSF cohort older and wealthier than the community averages
The ATO data shows that overall the average SMSF member has more money in super and has more taxable income than the average non-SMSF member. SMSF members on average are also older.
As I said this is interesting but for most of us unlikely to be useful at a practical level. For sure it’s important information for a marketing executive at a big financial organisation trying to word-smith a SMSF marketing campaign.
I mean no disrespect, but I can’t think of any such campaigns in the recent past that have been rip roaring successes even when data like this has been used to frame them. Maybe SMSF people are just a bit more independently minded than some like to assume.
Expenses Data Key Focus
Most will focus on comparing the data in this ATO publication with the ASIC consumer document about SMSFs published last year.
Fair enough, at face value, because we now know the data that ASIC elected to use – average expense data and expected time it takes most trustees to run these funds – were perhaps not as accurate as many suspected.
Perhaps a better course of action might have been to give a typical range for data. Whilst more accurate and more valuable perhaps the marketing people would have been demanding simplicity with the provision of a single number.
The reality – some things can’t be reduced to year three school comprehension or equivalent without creating distortions.
Total SMSF Funds
There are about 600,000 SMSFs.
A fair proportion of these, at least 60,000 and perhaps up to 120,000 of them, are funds that have been set up and never used or are funds that have been effectively wound up but not officially closed. Nearly all these non-operating funds would not lodge an annual SMSF return. In an ideal world we would be able to extract these funds from the SMSF population by formally closing those that will genuinely never be used or have ceased operation.
Total fund flows
Like other super sectors the SMSF market is shrinking in cashflow terms:
In 17-18 about 30% of benefit payments were lump sums. The balance were income stream payments.
Note that unlike other super sectors the SMSF space continues to have overall net money transferred to it from the other super fund types.
In 17-18 the ATO said there were almost 5,300 SMSF auditors. This is roughly a 20% decline on the 13-14 FY SMSF auditor population.
Although the number of auditors are falling the distribution of the number of SMSF audits performed by auditor has hardly changed:
But we can see in which cohorts SMSF auditors are leaving by looking at the total audits performed:
The ATO data shows that SMSF audit fees continue to be under stress (there has been no increase in the median $550 fee for at least 5 financial years with the average fee declining over the same period).
Tax Agent Lodgements
The number of tax agents lodging SMSF annual returns remain just above 14,000. In the 17-18 financial year over 50% of these lodged less than 10 SMSFs. Only 7% lodged more than 100 SMSFs.
This year the ATO annual report does not include a count on the number of SMSF contraventions reported. We have a breakdown, in percentage terms, of the types of contraventions only. Hopefully we will get this other data at a later time.
Self-managed super funds: A statistical overview 2017–18
The ATO is the regulator of self-managed super funds (SMSFs). A key element of our role is to collect and publish data about the health and performance of the SMSF sector. This annual overview provides key statistics and analysis of Australia's SMSF sector for the 2017–18 financial year.Read more