Self-managed superannuation funds (SMSFs) have long been associated with older Australians and small business owners looking for greater control over their retirement savings. But recent data suggests the sector is undergoing a quiet transformation.
Alongside tax reforms and persistent compliance challenges, younger people are slowly moving into the SMSF space. While 85% of SMSF members are 45 or older, there’s been significant growth in members aged between 25 and 34 from just 2.4% two years ago to around 10% now.
Almost 8,000 new SMSFs were established in the three months leading up to the end of March 2025, with the total number of new members rising by 13,000. Australia’s SMSFs hold an estimated $1.02 trillion in assets with 26% invested in listed shares and 16% in cash and term deposits.
A new tax era
The new Division 296 super tax, due to apply from 1 July 2025, is aimed at those with total superannuation balances exceeding $3 million. An extra 15% tax will apply to earnings on the portion of a member’s balance above $3 million, effectively lifting the tax rate on those earnings to 30%.
What makes Division 296 particularly controversial is the inclusion of unrealised gains. For example, if your SMSF’s share portfolio increases in value, you could face a tax bill on those paper profits – even if you haven’t sold any assets. This may cause issues for SMSFs holding illiquid assets such as property or farmland, which may rise in value but can’t be easily sold to cover the tax.
SMSF Australia and other industry bodies have raised concerns about the fairness and complexity of the rules, warning they could lead to unintended consequences.
Trustees with high balances should begin planning now before 30 June 2026, to consider asset rebalancing, contribution strategies and the timing of withdrawals. SMSF Australia recommends obtaining advice about your specific circumstances.
The advice gap
Despite the increasing complexity of SMSF regulation, the vast majority of trustees continue to operate without professional advice. While the number of SMSFs using financial advisers has grown to 155,000, up from 140,000 in 2023, some 483,000 are not using a financial adviser.
This could lead to costly mistakes, especially when navigating contribution caps, pension strategies or related-party transactions. SMSF Australia says that while there’s no legal requirement to obtain advice from a licensed financial planner, “unless you have the skills and expertise to do this yourself, it is certainly conventional wisdom to do so”.
The compliance burden
Every SMSF must undergo an annual audit by an approved SMSF auditor. This includes verifying the fund’s financial statements and ensuring it is compliant with super laws. Trustees are also required to value all fund assets at market value as at 30 June each year, using objective and supportable data.
For property and other complex assets, valuations can be time-consuming and costly. The ATO recommends using qualified independent valuers when assets represent a significant portion of the fund or are difficult to assess. Auditors may request evidence such as comparable sales, agent appraisals or formal valuation reports.
Failure to maintain accurate records or provide sufficient documentation can result in audit delays, contraventions, or penalties. Trustees must also ensure their investment strategy is regularly reviewed and documented, particularly when starting pensions or making significant contributions.
Next steps
As the SMSF sector evolves, trustees face a dual challenge: adapting to new tax rules and maintaining compliance. For those considering an SMSF or already managing one, the message is clear. Getting financial advice can give you peace of mind when the rules are regularly changing.
With Division 296 to contend with and a younger demographic entering the space, the sector is set for both growth and greater scrutiny.
Whether you’re a seasoned trustee or just starting out, now is the time to review your fund’s structure, seek expert guidance and ensure your paperwork is in order. Contact a trusted Nexia adviser to help put your SMSF on the right path.
