Regulators warn some SMSFs face increased scrutiny over risks to retirement savings

Self-managed super funds are facing increased scrutiny from regulators with the Australian Taxation Office (ATO) indicating a broad focus on SMSF compliance this year including new Payday Super rules, which from 1 July 2026 require employers to pay super contributions at the same time as employees’ regular wages¹.

It also includes the implementation of new legislation that introduces a two-tiered tax on total super balances above $3 million², as well as a greater focus on SMSFs that fail to meet their regulatory obligations in the 2025-26 financial year³.

The ATO estimates that in the 2022-23 financial year, $650 million was accessed illegally from SMSFs via prohibited loans or early access without a condition of release being met³.

“Instead, they were set up as conduits for short-term finance, often facilitated by promoters who target vulnerable individuals and charge exorbitant fees.”

The ATO has issued warnings to investors about red flags to help them identify when they have been targeted by an ‘SMSF scheme’ rather than a legitimate investment opportunity⁴. These include if an offer:

• sounds unusually profitable or low-risk.
• pressures you to act quickly.
• requires you to move super to a new SMSF for a specific investment.
• promises early access to super.
• involves complex structures you don’t understand.

Many SMSFs are well-managed and offer investors good returns. However, regulators have raised concerns about high‑pressure lead generation and super switching tactics used to promote SMSFs, particularly following the Shield and First Guardian collapses in 2024 and 2025, which disproportionately affected SMSF investors.⁵ These funds were never available on CFS platforms.

Last year, the Australian Securities & Investments Commission reported concerns that a majority of investors could be worse off after setting up an SMSF⁶.

ASIC Commissioner Alan Kirkland cautioned that self‑managed super funds (SMSFs) are not suitable for everyone, pointing to higher costs, greater complexity and compliance responsibilities, and increased risk.

Unlike most large super funds, SMSFs are not regulated by the Australian Prudential Regulation Authority (APRA), which means members take on greater responsibility for outcomes.

More than $1 trillion in assets are now held in SMSFs³. Close to 42,000 new SMSFs were established in the year to June 2025, up from 33,032 the previous year – an increase of 27%.

ATO Deputy Commissioner Ben Kelly said failure to meet basic reporting obligations, such as lodging an annual return on time, could indicate that an SMSF was at greater risk of other compliance breaches.

More than 93,000 SMSFs have outstanding returns, while illegal access occurs in 40% of those SMSFs that have never lodged a return.

ASIC Commissioner Alan Kirkland said SMSF trustees need to be fully aware of what is involved, including the time, skills and ongoing effort required to run a fund.