ATO ‘difficulties’ a challenge for advisers working with SMSFs

Dr Irene Guiamatsia, head of research at the research and analytics house Investment Trends, told the SMSF Association Technical Summit in Sydney that ongoing changes to the Australian Taxation Office (ATO) processes were presenting challenges to trustees and the professional advisers supporting them.

Her insights came from examining the evolving landscape of SMSF establishments, intentions and wind-ups from the perspectives of trustees and she concluded that compliance with the ATO’s event-based reporting is emerging as a new challenge and was cited as the main reason for wind-ups.

“The average adviser now manages more client money compared with a year ago, but that number must be seen in the context of a smaller number of SMSF specialists,” she said.

Investment Trends defines an SMSF specialist as an adviser with more than 20 SMSF clients and an SMSF generalist with one to 20 SMSF clients.

The Investment Trends 2024 SMSF Adviser and Accountant Report showed a significant proportion of SMSF specialist advisers reported an increase in year-over-year revenue from SMSF clients.

“Advisers have raised their upfront fees slightly and have broadened their client mix through accelerated technological transformation. In addition, advising on property and longevity protection have become a bigger part of the SMSF advisory package,” she said

Guiamatsia said trustees were increasingly influenced by internet research and word of mouth in the decision to set up their SMSF, especially seeking access to specific asset classes such as property.

“The 2024 Vanguard/Investment Trends SMSF Investor Report highlighted the use of investment advisers among SMSFs has declined to a record low, with pension strategies and estate planning being the top two areas where trustee advice needs are unmet,” she said.

However, she added that administration and compliance formed the largest cluster of difficulties faced by SMSFs, ahead of investment selection.

Furthermore, Guiamatsia said that more than half of SMSF accountants had reported increased year-on-year revenue, with “best practice” accountants consistently raising their fees over the past three years.

“Technological adoption and proactive engagement with the ATO are top priorities for SMSF accountants, with those classified as being ‘best practice’ spending more time on administration tasks, potentially indicating a sharper focus on higher quality output,” she said.