It appears there may be further consideration by Parliament whether the Superannuation (Better Targeted Superannuation Concessions) Imposition Bill 2023 will be passed before the next election or lapse. 

No additional analysis on this proposed new tax on superannuation balances above $3 million will be provided until we know its future.

A report has been released comparing investment performance between SMSFs and larger APRA funds and the competition is quite close:

https://www.smsfassociation.com/media-release/new-research-shows-smsfs-outperform-over-longer-period 

The SMSF Association first commissioned this research project back in 2021 and the ICFS has published annual performance figures for the SMSF sector for the past four years. The most recent research is based on data from 421,000 SMSFs (69 per cent of all SMSFs) provided by BGL Corporate Solutions, Class and SuperMate with the ICFS project team comprising Dr George Mihaylov (lead), Dr Ivan Indriawan and Professor Ralf Zurbruegg.

Dr Mihaylov said this is the largest independent study of its kind, capturing the financial performance of almost seven out of every ten SMSFs in Australia.

“APRA funds outperformed the SMSF sector in 2022/23 continuing the interchanging pattern we’ve observed previously, where APRA funds outperform in some years while the SMSF sector outperforms in others.”

The recent Administrative Appeals Tribunal (AAT) decision of BPFN and Commissioner of Taxation (Taxation) [2023] AATA 2330 (28 July 2023) (BPFN) provides some insight into how the ATO may seek to investigate multiple-entity structures for non-arm’s length income (NALI).

NALI can expose a SMSF to the highest level of taxation rates, which given superannuation is a low tax rate concessional environment goes to the heart of why we place investments in super.

The taxpayer ultimately won and the NALI analysis was in relation to a lending business they placed in their SMSF, not a simple real estate investment or even a property development.

The judgment shows some snippets of the types of receipts of the business owned in super that would be targeted by the ATO, and these could cover much more than the 0% interest rates for LRBAs that the regime was originally designed to target.

Since then, the ATO has issued a draft Decision Impact Statement (DIS) on this case dated 10 April 2024 requesting feedback by 10 May 2024. The ATO confirms that it will not appeal the decision.

Dealing with potential NALI threats from the ATO will be an increasingly complex and broad risk for any of the more rare business investments placed into your SMSF.

The choices are either stick to traditional investments in your SMSF that don't involve related party transactions or be ready to have documentation for all expenses and annual valuations.

In some cases the administrative burden may not be worth maintaining the investment in your SMSF.

The amendments under under AASB 2020-2 in 2021 potentially caused SMSF and discretionary / unit trust deeds to effect the accounting standards required for preparation of trust / SMSF financial statements.

However the accompanying fact sheet shows that entities required only by their SMSF / trust deed to prepare financial statements that comply with “accounting standards”, “generally accepted accounting practices or principles” or other terminology that is not specifically the Australian Accounting Standards (AAS). 

Small proprietary companies (unless foreign controlled) are also not affected.

SMSF and discretionary / unit trust deeds that specifically require compliance with AAS can be seen as a rarity (but they are out there).

T Docs products are flexible allowing prepararation of financial statements in accordance with normally accepted accounting procedures, practices and/or principles.