'Stop and ask why': ATO issues urgent warning on SMSF setups

The ATO said that an SMSF should support retirement goals, rather than just a singular investment opportunity. 

The Tax Office warned Australians to think carefully when they are being encouraged to set up an SMSF to invest in property, cryptocurrency, or another alternative investment opportunity. 

This also comes as ASIC recently expanded its list of recognised businesses collecting personal details through online ads and forms. 

Such information can lead to people being contacted about financial products, investments or SMSF arrangements. 

These scammers may urge people to act frantically to start an SMSF, to best gain high returns, and pressure people to move their super before having had the time to properly consider the risks involved. 

As such, the ATO encouraged people to stop and ask themselves: 

• Why am I being encouraged to set up or roll over to an SMSF?

• Do I understand what managing an SMSF involves? 

• Have I checked whether the person or business is registered to give this advice? 

• Have I spoken to someone independent who is not connected to the investment?

SMSF Association chief executive Peter Burgess said the association supported reforms to curb aggressive lead generation and close regulatory gaps that lead consumers toward unsuitable financial setups. 

“This unscrupulous behaviour has no place in our financial services ecosystem and needs to be the clear focus of reform.” 

Burgess warned that the issue isn't the SMSF structure itself, but rather the inappropriate and often unlicensed advice given to trustees, which ultimately drives consumer harm. 

The association recently urged Treasury to implement stricter regulations against unsolicited lead generation and exploitative consumer steering practices. 

Amongst these, several new measures were proposed by the association to bolster licensing and accountability within the advice and property sectors, while toughening enforcement against unlicensed operators and those who enable consumer harm. 

The ATO reminded SMSF trustees that they are responsible for their fund’s decisions and ensuring it complies with the law. 

It also emphasised that an SMSF should support a member’s retirement objectives rather than be established solely for a single investment opportunity, and urged trustees to fully understand both the investment and the SMSF structure before committing.