Malaysian developer <a href="https://www.apartments.com.au/developers/s-p-setia">SP Setia</a> is the latest to jump into St Leonards booming Transport Oriented Development precinct.

The developer, which has previously delivered Sapphire by the Gardens apartment development in Melbourne, identified the Atchison Street site in 2023. It filed a Scoping Report around 12 months ago, and now has revealed the designs for the new&nbsp;40-storey mixed-use tower.

The State Significant Development Application covers <a href="https://next-portal.urban.com.au/projects/14650/summary">20-22 Atchison Street</a>, a 1,374 sqm site positioned between St Leonards Station and the new Crows Nest Metro station.

Designed by <a href="https://www.apartments.com.au/architects/cox-architecture">COX Architecture</a>, the project would deliver 181 apartments, above a four-storey commercial podium, five basement levels, and new public domain works along Mitchell Street. The apartment mix comprises 35 one-bedroom apartments, 39 one-bedroom-plus-study apartments, 85 two-bedroom apartments, and 22 three-bedroom residences.

The proposal has been lodged as a shop-top housing development under the NSW Government’s TOD planning pathway, which allows increased density around key transport infrastructure. The site sits within the recently rezoned Crows Nest Accelerated TOD Precinct.

<img alt="First look: SP Setia targets St Leonards skyline with 40-storey TOD tower" data-entity-type="file" data-entity-uuid="b799673d-48e2-46b0-801a-0e33a9330100" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/atchinson%20site.png?VersionId=dPh0UfwfaHpbFL1R7H1cbZNbIW0CHbCC" />

SP Setia acquired the Atchison Street site as part of its continued expansion into the Australian apartment market. In comments made to City &amp; Country (The Edge Malaysia) in 2023, SP Setia President and CEO Datuk Choong Kai Wai described the acquisition as “a strategic move” aligned with the group’s post-pandemic market recovery strategy.

“Our target for this exceptional development is local and overseas buyers, including first-home buyers, downsizers and investors,” Choong said.

The tower has been designed as a slender vertical form rising from a mixed-use podium, with COX Architecture positioning the development as a response to the evolving St Leonards and Crows Nest skyline.

“The purpose of the project is to facilitate the delivery of high-quality housing at a strategically located site and deliver a built tower outcome that is consistent with the desired future character of St Leonards and aligns with the TOD controls,” the design report stated.

<img alt="First look: SP Setia targets St Leonards skyline with 40-storey TOD tower" data-entity-type="file" data-entity-uuid="b1a85eee-76f7-436c-a6da-73ba827b9b13" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/atchinson%20entry.png?VersionId=dA9jHGPMcm.dDbwk4QfxqWiY5bfh3UVt" />

The podium would incorporate retail uses fronting Atchison Street, commercial tenancies, landscaped communal areas, and pedestrian improvements along Mitchell Street. Vehicle access and loading would be consolidated via Atchison Lane.

Residents would have access to more than 665 sqm of communal indoor and outdoor spaces, while the development proposes 96 parking spaces across five basement levels.

The proposal also includes a commitment for 10 per cent of residential floor space to be allocated toward affordable housing through a monetary contribution.

COX said the tower form responds directly to the emerging high-density character of the precinct while seeking to maximise solar access, cross ventilation, and outlook from apartments.

<img alt="First look: SP Setia targets St Leonards skyline with 40-storey TOD tower" data-entity-type="file" data-entity-uuid="2163f85c-f63b-4be3-aafa-f8763976cec5" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/Article%20Feature%20Image%20%28Grid%29_5.png?VersionId=WiAmtIKJ6.ZQ41EtYEQ1fol7AeorKBlL" />

“The building is orientated towards north,” the Apartment Design Guide compliance report noted, adding that the tower’s slim form was driven by the constrained inner-urban site dimensions.

The design also incorporates landscaped setbacks and communal open space at podium level, intended to soften the interface with surrounding streets and improve pedestrian amenity.

The project adds to a growing wave of redevelopment proposals reshaping St Leonards and Crows Nest following the opening of the Sydney Metro City line and the NSW Government’s push for higher-density housing around major transport nodes.

Last week Stockland filed plans just down the road. They want to build a <a href="https://www.apartments.com.au/new-apartments/601-pacific-highway-st-leonards-nsw-2065">52-storey tower on Pacific Highway</a>.

Read more:&nbsp;<a href="https://www.apartments.com.au/news/nsw/first-look-stockland-plans-52-storey-538-apartment-st-leonards-tower">First look: Stockland plans 52-storey, 538-apartment St Leonards tower&nbsp;</a>

Joel Robinson

First look: SP Setia targets St Leonards skyline with 40-storey TOD tower

<a href="https://www.apartments.com.au/developers/urban-property-group">Urban Property Group</a> has revealed plans for a new mixed-use tower at 10 Dangar Street, Wickham, advancing a proposal that would reshape the southern gateway to Newcastle’s city centre with one of the city’s tallest residential buildings.

The State Significant Development proposal, now on exhibition, seeks approval for a <a href="https://www.apartments.com.au/new-apartments/bowline-10-dangar-street-wickham-nsw-2293">43-storey tower</a> immediately adjacent to the Newcastle Interchange. The project would deliver around 200 apartments, including 42 affordable housing dwellings, alongside 99 co-living units, a 171-room hotel, retail space, and new public domain integrated through the site.

The scheme marks a significant escalation of plans previously approved for the site. Urban Property Group took over the prominent 2,904 sqm parcel, where excavation and demolition had already commenced under an earlier consent for a 14-storey mixed-use development.

<img alt="First look: Urban Property Group unveils Newcastle’s next supertower at Wickham interchange" data-entity-type="file" data-entity-uuid="58a96dd9-407f-4d20-86b4-94e4bfeef74b" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/wickham%20podium.png?VersionId=LGlf08pdFGAZDzvx_CXC4XakHNZRuEE0" />

Designed by <a href="https://www.apartments.com.au/architects/sjb-architects">SJB</a>, the tower has been conceived as a landmark transit-oriented development anchored to the Newcastle Interchange precinct. The proposal includes 245 build-to-sell apartments across a mix of one, two, and three-bedroom residences, as well as two penthouses. Fifteen apartments and one operational unit are earmarked for NDIS housing. The co-living component would add a further 99 units, while the podium would accommodate retail uses and hotel facilities.

SJB said the site presents “a valuable opportunity to anchor the precinct by setting the standard for design, active ground planes and character at the key southern gateway.”

The architecture responds directly to the site’s position beside major transport infrastructure and within one of Newcastle’s fastest-evolving urban renewal precincts. The tower form sits above a sculpted podium designed to frame new public spaces, including a through-site pedestrian link connecting Station Street to Hannell Street, landscaped plazas, and activated retail edges.

<img alt="First look: Urban Property Group unveils Newcastle’s next supertower at Wickham interchange" data-entity-type="file" data-entity-uuid="a7bd6ff0-f7db-4ce8-a6dc-ea56e72c6149" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/wickham%20lanne.png?VersionId=xzf39VADyhj7zBQY2I9fx9vI62u2tuSb" />

The design report describes the project as part of the broader transition of Wickham into “a vibrant, high-quality mixed-use urban precinct” that leverages proximity to the station, open space, and regional connectivity.

A detailed public art strategy has also been prepared for the development. The strategy positions the project as “a transit-oriented development of state significance at the gateway to Newcastle’s city centre” and outlines a series of integrated artworks responding to Newcastle’s industrial and transport heritage.

Creative Road’s curatorial framework for the project, titled Unveil, draws on “stratified surfaces, carved volumes, and light-filled apertures” while referencing Newcastle’s transformation from an industrial city into a contemporary education and technology hub.

<img alt="First look: Urban Property Group unveils Newcastle’s next supertower at Wickham interchange" data-entity-type="file" data-entity-uuid="77a882bb-14b1-4d28-99ff-9438e39508c0" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/wickham%20site.png?VersionId=cevgo_vN0eKPK78P8YcEu3mKPLkpFqE7" />

The proposal is being advanced through the NSW Housing Delivery Authority pathway after being declared State Significant Development in June 2025. The accompanying scoping report states the development aims to “maximise the site’s proximity to the Newcastle Interchange by delivering transit-oriented development” while increasing housing supply and affordable housing provision within the Newcastle LGA.

Urban Property Group’s plans align with the long-term strategic vision established under the Wickham Master Plan, which identified the interchange precinct as suitable for substantial uplift in height and density. The current proposal would significantly intensify that vision, positioning the tower among the tallest developments proposed for Newcastle.

The site sits immediately north of the Newcastle Interchange, bounded by Dangar Street, Hannell Street, and Charles Street. It is surrounded by a rapidly growing cluster of residential towers and mixed-use projects that have emerged following the completion of the light rail and transport interchange.

First look: Urban Property Group unveils Newcastle’s latest tower at Wickham interchange

Bottega House has completed settlement of a landmark riverfront site in Macquarie Street, St Lucia, representing its first major Brisbane development.&nbsp;

Positioned on the banks of the Brisbane River, the <a href="https://www.apartments.com.au/new-apartments/180-macquarie-street-st-lucia-qld-4067">premium site at 180 Macquarie Street</a> features uninterrupted river frontage in one of Brisbane’s most tightly held residential precincts.&nbsp;

The proposed development, currently under assessment with Brisbane City Council, has been designed by <a href="https://www.apartments.com.au/architects/plus-studio">Plus Studio</a> with interiors by <a href="https://www.apartments.com.au/interior-designers/mim-design">Mim Design</a> and will deliver a boutique collection of premium residences positioned specifically for owner occupiers and downsizers.&nbsp;

The residences are set to redefine luxury apartment living in the area, with a focus on architectural quality, refined finishes, landscape integration and elevated amenities including curated wellness facilities, resort-style pools and recreation spaces rarely seen in the local market.&nbsp;

Exclusive sales for the project will be led by Keenan &amp; Byrne, ahead of an anticipated launch later this year.&nbsp;

Bottega House Managing Director Nick Malloch said the project reflects the group’s ambition to deliver a highly curated residential offering within one of Brisbane’s most tightly held precincts.&nbsp;

“This is an incredibly rare riverfront opportunity and one we have approached with a long-term perspective,” Malloch said.&nbsp;

“Our vision from the outset was to create a boutique collection of residences that feel more like private homes than traditional apartments, with generous proportions, refined finishes and exceptional amenity throughout."

Malloch says there is a&nbsp;lack of premium owner-occupier stock of this quality in the market, particularly for downsizers wanting space, privacy and a true lifestyle offering without compromise.&nbsp;

"Demand is expected to be strong given the scarcity of premium riverfront opportunities of this nature within Brisbane’s inner-west."&nbsp;

Bottega House secures landmark riverfront site in St Lucia 

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The arrival of the first piling rig officially marks the commencement of construction at SIERA’s new beachside apartment development, Exhale, in Northcliffe.

<a href="https://www.apartments.com.au/new-apartments/exhale-surfers-paradise-8-enderley-avenue-surfers-paradise-qld-4217">Exhale</a>, a glass-encased tower featuring 54 large-scale apartments at 8 Enderley Avenue, is SIERA’s third Gold Coast development. It follows the recently completed PIPIS Bilinga beachfront project, which achieved suburb-record prices, and the soon-to-be-completed Chevron Island development, Tapestry.

[smartcode_project:default project_id=112661 project_image_fid=359603]

<a href="https://www.apartments.com.au/developers/siera">SIERA</a> Founder and Managing Director Brent Thompson said the arrival of the piling rig represented a significant milestone for the development, which is scheduled for completion in late 2028.

Over the next month, around 260 piles are expected to be installed as work progresses on the basement structure. The building is anticipated to rise above ground level early next year, before unveiling its sculptural glass curtain wall, developed in collaboration with specialist façade engineers.

“The façade was designed to maximise panoramic coastal views while creating a distinctive architectural identity,” Thompson said.

[smartcode_project:default project_id=112661 project_image_fid=355935]

Designed by BDA Architecture, Exhale will comprise just 54 two- and three-bedroom residences across 26 levels, a level of low-density living rarely delivered in this beachside pocket between Surfers Paradise and Broadbeach.

The project has been conceived as a resident-only building, with no short-stay accommodation permitted. SIERA says the model is intended to appeal to long-term owner-occupiers rather than transient holiday demand.

[smartcode_project:default project_id=112661 project_image_fid=361052]

Residences have been designed with large-format layouts and expansive glazing, with most apartments featuring more than 30 metres of glass frontage to maximise natural light and ocean views.

The amenity offering spans two levels and centres on wellness and lifestyle, including a heated magnesium pool, sauna, yoga and Pilates studio, gymnasium, private dining facilities, cinema lounge, and dedicated surfcraft storage.

[smartcode_project:default project_id=112661 project_image_fid=359607]

More than half of the apartments have already sold. SIERA has also opened a sales gallery for Exhale at its Chevron Island commercial premises, near its Tapestry tower and the site of its second Chevron Island apartment development, which is slated to launch in early 2027.
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</section>

[smartcode_project_cta:default project_id=112661]

SIERA kicks off construction at Northcliffe tower Exhale

Local Little Bay residents, along with buyers from premium postcodes across Sydney’s affluent Eastern Suburbs, have dominated purchases in developer-builder Urban Property Group’s first Eastern Suburbs apartment development, <a href="https://www.apartments.com.au/new-apartments/este-little-bay-jennifer-street-little-bay-nsw-2036">ESTE Little Bay</a>.

The $250 million coastal project, one of the first new developments in the area in several years, has proven particularly popular with downsizers, especially those from Coogee and Bondi. One Double Bay downsizer paid $4.7 million for a four-bedroom penthouse, setting a new local apartment price record in the process.

Buyers have been attracted to the combination of coastal tranquillity, premium design and amenity-rich neighbourhood living. The walkable village setting, along with proximity to three of Sydney’s leading golf courses, New South Wales Golf Club, St Michael’s Golf Club and The Coast Golf Club, has also been a key drawcard.

[smartcode_project:default project_id=112343 project_image_fid=352689]

Built across two low-rise buildings designed by <a href="https://www.apartments.com.au/architects/hill-thalis-architecture-urban-projects-pty-ltd">Hill Thalis</a> and set along a lush, landscaped green spine, designed by leading landscape architect <a href="https://www.apartments.com.au/landscape-architect/arcadia-landscape-architecture">Arcadia</a>, ESTE Little Bay offers a collection of one, two, three and four-bedroom residences with interiors by Richards Stanisich.

<a href="https://www.apartments.com.au/developers/urban-property-group">Urban Property Group</a> Sales Director, Tom McIvor said the response to ESTE has been "nothing short of extraordinary."

“Buyers have been quick to recognise ESTE as a rare opportunity to invest in a coastal sanctuary that offers both seclusion and connectivity to the heart of Sydney,” McIvor said.

[smartcode_project:default project_id=112343 project_image_fid=352687]

<a href="https://www.apartments.com.au/project-marketer/srm-residential">SRM Residential</a> Senior Director, <a href="https://www.apartments.com.au/project-marketer/srm-residential">Clayton Ross</a> said the local market has responded incredibly well, driven by ESTE’s exceptional location and the rarity it offers.

“We’ve seen strong interest from a variety of buyer groups, all of whom are drawn to the exclusivity and quality of the build and construction by the 4.5-star iCIRT-rated builder / developer, Urban Property Group. There’s truly nothing else like it along Sydney’s coastline.”

[smartcode_project:default project_id=112343 project_image_fid=352690]

The project also includes robust buyer protections, including Resilience Insurance’s Latent Defects Insurance, providing 10 years of structural cover, and an independent iCIRT-rating of the developer.

“The iCIRT-rating adds another layer of confidence,” Ross added. “Buyers see it as a safeguard for their investment and their lifestyle.” A highlight of ESTE’s offering is its exclusive wellness amenities, including a heated rooftop infinity pool and outdoor heated spa, a state-of-the-art Technogym fitness centre, and a sauna.

<a href="https://www.apartments.com.au/new-apartments/este-little-bay-jennifer-street-little-bay-nsw-2036">ESTE Little Bay</a> is topped out and is on track to complete towards the end of 2026, with residents moving in before Christmas.

[smartcode_project_cta:default project_id=112343]

Eastern Suburbs buyers snap up ESTE Little Bay apartments

Sydney’s property market is known for high prices, competitive bidding, and mounting pressure on first home buyers. But change is on the horizon.

From late 2025, eligible first home buyers in New South Wales will have access to a new federal government initiative aimed at addressing affordability: the Help to Buy Scheme.&nbsp;

<h2>What is the Help to Buy Scheme?</h2>

The program introduces a shared equity model intended to reduce the upfront cost of entering the property market, particularly in high-demand urban areas such as Sydney.

The scheme operates under a shared ownership structure in which the federal government takes an equity stake of up to 40 per cent for new homes, or 30 per cent for existing dwellings. This arrangement allows eligible buyers to significantly reduce their loan size and avoid the added cost of Lenders Mortgage Insurance (LMI).

Under this model, purchasers can enter the property market with as little as a two per cent deposit, well below the traditional 10 to 20 per cent usually required. The government’s contribution is not a loan but a co-ownership stake in the property. As such, there is no interest or rent charged on its portion.

Because the government’s equity combined with the buyer’s deposit typically meets or exceeds the 20 per cent threshold, LMI does not apply. The remaining balance, generally between 60 and 70 per cent of the property’s value, is financed through a standard home loan with a participating lender.

The government's equity in the property remains in place until the buyer chooses to repay it voluntarily or until the property is sold. Buyers can buy back the government’s share over time, in increments of at least five per cent, depending on their financial situation.

There is no fixed repayment timeline, but the amount to be repaid will be based on the property's market value at the time of repayment, not the original purchase price.

<h2>How do you qualify for the&nbsp;Help to Buy Scheme?</h2>

To qualify for the Help to Buy Scheme, applicants must meet the following conditions:

<ul>
	<li>Be an Australian citizen at least 18 years of age.</li>
	<li>Be a first-home buyer who does not currently own property.</li>
	<li>Intend to live in the property as their primary residence.</li>
	<li>Earn less than $100,000 per year for individuals, or $160,000 for couples.</li>
	<li>Purchase a property within the regional price caps, currently $950,000 in Sydney, though this is expected to rise to approximately $1.3 million ahead of the program’s launch.</li>
</ul>

While the Help to Buy Scheme does not solve affordability challenges across the board, it does offer a more accessible pathway for a defined segment of the market, particularly younger buyers with moderate incomes who have been priced out of traditional lending routes.

The scheme is expected to commence in NSW in late 2025, as part of a national rollout.

Under the new model, purchasers can enter the property market with as little as a two per cent deposit, well below the traditional 10 to 20 per cent usually required

Help to Buy Scheme: What first home buyers in NSW need to know

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Bank-owned superannuation funds are losing billions to industry funds a response of customers in response to their misbehavior that has been revealed at the banking royal commission.
AustralianSuper says it received more than $1 billion from new customers in each of July and August – double the amount of the same time last year.
Chief investment officer Mark Delaney said the gains were due to transfers out of retail funds.
"We can see where the money is coming from," he told Fairfax Media. "It's money being rolled in and it's coming from retail providers."
</div>
<div class="cq-article-content-media section">With more than $140 billion in funds under management, AustralianSuper is already the nation's largest super fund.</div>
<div class="cq-article-content-paras section">
In the June quarter, the value of industry funds surpassed retail funds for the first time; the sectors hold $632 billion and $622 billion respectively.
It appears while industry super executives were called before the royal commission they emerged largely unscathed.
Hostplus was found to have fallen below community standards when it sought to keep low-balance members in the fund.
Hostplus had been riding a wave of popularity generated by author Scott Pape, better known as The Barefoot Investor.
The Hayne royal commission gave industry super funds a surprisingly "cursory" examination, says former union boss Paul Howes.
KPMG wealth chief and former union boss Paul Howes told Fairfax Media he was surprised at "the significant amount of time that was dedicated to retail funds versus quite a cursory amount of time on industry funds."
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Howes said consolidation of industry funds was the most important issue faced by the super sector and yet the commission spent comparatively little time exploring it.
<div id="article-inline-ad" class="adWrapper">"We have 238 APRA-regulated funds in a country of 25 million people," he said.</div>
</div>
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"It is insane, and it is an indictment on our sector and the regulator that so many exist.
"What also surprised me was the lack of focus on returns," he said.
"I felt they talked a lot about fees ... transparency and disclosures, but ultimately the $2.7 trillion question for the sector is about returns. It was almost like the elephant in the room that was never mentioned."
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j.ballantyne1990-6AQqhLzZaK

After cursory examination, Hayne royal commission triggers influx of billions into industry super

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GUEST OBSERVATION
The Productivity Commission’s <a href="https://www.pc.gov.au/inquiries/current/superannuation/assessment/draft" target="_blank">latest report on superannuation</a> asks whether the current system is working for members – and answers <a href="https://theconversation.com/young-people-not-employers-should-choose-super-fund-productivity-commission-97329" target="_blank">firmly in the negative</a>.
The report identifies four factors that can chip away at super fund members’ retirement benefits:
<ul>
<li>fees</li>
<li>rate of return</li>
<li>insurance</li>
<li>holding multiple accounts
</li>
</ul>
What is also clear from the evidence laid out in the report that the not-for-profit sector, including industry super funds, generally outperforms the retail sector. Generally they offer lower fees and higher returns, although there are some industry funds that rank among the lowest-performing.
Despite recent reforms such as the 2013 launch of MySuper, the superannuation system is still beset with the same problems of rising fees and patchy performance. And there is still no substitute for just hopping on the internet and proactively checking that your super is in the best possible hands.
The situation is made complex by the highly segmented nature of Australia’s superannuation system. Besides the public sector funds, the most significant sectors are the retail sector and the not-for-profit funds, including industry funds (see figure 1.5 here). These sectors compete for as large a slice as possible of the overall pool.
Self-managed superannuation funds are also a rapidly growing sector of the market, however the regulatory framework applied to these funds has some significant differences to the rest of the market.
Tracking your super
Most employees have the right to choose their superannuation fund (<a href="http://kmo.ministers.treasury.gov.au/speech/008-2018/" target="_blank">although around one million don’t</a>), and if they don’t nominate a fund, employers will pay contributions into a default fund.
As the new report points out (see figure 1.2 here), up to 40% of superannuation members hold multiple super accounts. In some cases this may be a deliberate choice – someone with a self-managed super fund may might, for example, choose to have their employer contributions paid into a conventional fund. But often multiple funds are a consequence of employees being enrolled into a new default fund instead of paying contributions into an existing fund.
A range of <a href="https://www.ato.gov.au/Individuals/Super/Keeping-track-of-your-super/" target="_blank">tools</a> is now available to help people consolidate their super, so as not to <a href="https://www.moneysmart.gov.au/superannuation-and-retirement/keeping-track-and-lost-super/consolidating-super-funds" target="_blank">lose any of their savings</a>. In the 2018 federal budget the government <a href="https://treasury.gov.au/consultation/c2018-t286292/" target="_blank">announced</a> that it would reduce the paperwork involved in this process by allowing the Australian Taxation Office to consolidate inactive super accounts with balances less than A$6,000.
MySuper
The primary aim of <a href="https://www.moneysmart.gov.au/superannuation-and-retirement/how-super-works/choosing-a-super-fund/mysuper" target="_blank">MySuper</a>, introduced in 2013, was to provide a <a href="https://static.treasury.gov.au/uploads/sites/1/2017/06/R2009-001_Final_Report_Part_2_Chapter_1.pdf" target="_blank">simple default product</a> that meets the needs of members who are not engaged with their superannuation. They have no entry fees, offer simpler insurance and services, and lower administration fees that are charged on a cost-recovery basis.
But although the effects of MySuper are generally positive, the 2013 reforms may also have contributed to the erosion of funds identified by the new review.
This report confirms (see chapter 3, p.127 here) that super fund fees in Australia are among the highest in the OECD, and the upward pressure on fees continues. Just this month, the Commonwealth Bank announced that it would <a href="https://www.smh.com.au/money/super-and-retirement/cba-s-superannuation-sting-is-out-and-out-gouge-says-minister-20180523-p4zh23" target="_blank">pass the costs of regulation onto some superannuation products</a>.
One of the consequences of introducing the fee charging limitations for MySuper accounts was that the previous member protection standards that limited fees on low-balance accounts was <a href="https://www.legislation.gov.au/Details/F2013C00067" target="_blank">repealed</a>. In the 2018 federal budget the government <a href="https://treasury.gov.au/consultation/c2018-t286292/" target="_blank">announced</a> that fees would be capped in respect of certain low balance accounts.
MySuper products must provide also life insurance on an opt-out basis. Insurance in superannuation has also been under scrutiny, with inappropriate or junk policies being included in superannuation. The government has announced proposals to change this to an <a href="https://treasury.gov.au/consultation/c2018-t286292/" target="_blank">opt-in</a> system.
This report adds to the evidence that overall the current structure of not-for-profit funds is serving members well. Although it supports proposals to require the trustees of industry funds to increase the number of independent directors, the Productivity Commission highlights the need for a stronger focus on trustee skills and addressing conflicts of interest.
Take responsibility for your super
It is concerning that many of the problems identified by the new report are the same ones that arose in the 2014 Financial System Inquiry, the 2015 Cooper Review, and in the evidence to the Financial Services Royal Commission.
Most of these issues raised have been part of the discussion for the past decade. The fact that they are still on the table shows a level of inertia in the system, and a reluctance by the industry to address its problems.
So how can we, as individuals, protect our retirement nest egg? The key is to engage with the superannuation system, and not just as we approach retirement.
Compare your super fund’s fees and returns with those of the best performing funds, and then choose accordingly. Reduce your fees and insurance premiums by consolidating your accounts, and make sure that any insurance in the fund meets your needs.
<img src="https://counter.theconversation.com/content/97318/count.gif?distributor=republish-lightbox-basic" alt="The Conversation" width="1" height="1">The difference at retirement is worth it – up to A$407,000 for a 21-year-old by the time they finish their career.
Helen Hodgson, Associate Professor, Curtin Law School and Curtin Business School, Curtin University
This article was originally published on <a href="http://theconversation.com">The Conversation</a>. Read the <a href="https://theconversation.com/superannuation-is-still-mired-in-the-same-old-issues-and-no-one-is-going-to-fix-your-nest-egg-but-you-97318">original article</a>.
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Superannuation is still mired in the same old issues, and no one is going to fix your nest egg but you

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Around 90% of financial advice on setting up a self-managed super fund (SMSF) did not comply with relevant laws, a review by the Australian Securities and Investments Commission (ASIC) has found.
ASIC today released Report 575 SMSFs: Improving the quality of advice and member experiences and Report 576 Member experiences with self-managed superannuation funds.
ASIC reviewed 250 client files randomly selected based on Australian Taxation Office (ATO) data and assessed compliance with the Corporations Act’s ‘best interests’ duty and related obligations.
<img src="https://download.asic.gov.au/media/4780401/rep-576-infographic.jpg" alt="Rep 576 Infographic" width="500" height="353">
In 91% of files reviewed the adviser did not comply with Corporations Act’s ‘best interests’ duty and related obligations. The non-compliant advice ranged from record-keeping and process failures to failures likely to result in significant financial detriment. This included:
<ul>
<li>In 10% of files reviewed, the client was likely to be significantly worse off in retirement due to the advice;</li>
<li>In 19% of cases, clients were at an increased risk of financial detriment due to a lack of diversification.</li>
</ul>
ASIC Deputy Chair Peter Kell said the standard of advice on SMSFs must improve. ‘A healthy and robust SMSF sector is an important part of our super system. However, it is clear lots of people are setting up self-managed super funds without knowing whether this is the best option. The financial advice sector has significant work to do to lift their performance on this issue.’
ASIC will be taking follow up regulatory action, in particular where consumers have suffered detriment.
ASIC also conducted market research which included interviews with 28 consumers who had set up an SMSF and an online survey of 457 consumers who had set up an SMSF. Through this work we found a lot of people do not understand fully the risks of SMSFs, or their legal obligations as trustees.
In the online survey:
<ul>
<li>38% of respondents found running an SMSF more time consuming than expected;</li>
<li>32% found it to more expensive than expected;</li>
<li>33% did not know the law required an SMSF to have an investment strategy; and</li>
<li>29% mistakenly believed that SMSFs had the same level of protection as prudentially regulated superannuation funds in the event of fraud.</li>
</ul>
Mr Kell said, ‘Decisions about super are some of the most important a person can make. However, ASIC found there is a lack of basic knowledge of the legal obligations in setting up or running an SMSF. It is also concerning many people with an SMSF have not understood the importance of diversification, which puts their financial future at risk.’ 
ASIC also found some people had moved to SMSFs as a way to get into the property market, and were using it solely for this purpose without a wider investment strategy.
The interviews also identified a growing use of 'one-stop-shops' where the adviser has a relationship with a developer or a real estate agent whose products the person is encouraged to invest in. This put people at increased risk of getting poor advice that did not take account of their personal circumstances or is not given in their best interests.
ASIC’s findings are supported by the recent Productivity Commission super report which found smaller SMSFs (with balances under $1 million) delivered on average returns below larger funds, and that the costs for low-balance SMSFs are higher than for funds regulated by the Australian Prudential Regulation Authority (APRA).
ASIC’s SMSF report will inform its surveillance and regulatory work into the SMSF sector. ASIC will take enforcement action as appropriate, including ensuring licensees with non-compliant advisers undertake client review and remediation.
More broadly, ASIC and the ATO will have an increased focus on property one-stop-shops. This will include sharing data and intelligence, and ASIC taking enforcement action where it sees unscrupulous behaviour.
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Most new SMSFs set up with flawed advice, and not even compliant 

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The cautious approach adopted by self-managed super funds (SMSFs) considering investing in residential property is the right one, according to Shane Oliver, head of investment strategy and chief economist at AMP Capital Investors.
Oliver, one of the more cautious economists commenting on the housing market, says most investors have sensed that the property market’s has already done its 20-year dash of solid growth.
Oliver says the last time property was a smart investment was in the early to mid-1990s, when investors would have probably seen a three- to four-fold increases in the value of their property investments.
He says it is possible for SMSFs to find an investment property worth buying, but it requires them doing a lot of homework and research.
In a recent investment report looking at which investments offered a decent yield in the current market of declining interest rates, Oliver was not upbeat about returns from residential property investments. He says the boom over the last 20 years has resulted in yields of just 3.7% on houses and 4.7% on apartments, before taking into account the costs of investing. Net yields, once costs have been taken into account, are just 1% for houses and 2.3% for apartments, says Oliver.
Oliver's gloomy outlook comes as figures from SMSF advisory firm Dixon Advisory show that only about 5% the firm’s 4,500 DIY super clients have used limited recourse borrowing rules to include property in their portfolio, reported the Australian Financial Review.
However, Oliver has toned down his sentiments about the degree to which residential property in Australia is overvalued.
In a video update on the housing market in July, Oliver said that a few years back AMP was saying that houses were overvalued by as much as 30% but “the degree of overvaluation has come down, particularly over the last couple of years”.
Now he says they are 10% to 15% overvalued.
“We have very expensive housing in Australia relative to the US and UK, which have seen sharp adjustments in recent years."
However, Oliver says a key difference between Australia and the US is that the US had a housing boom at the same time as a supply boom so as prices started to fall it was made worse by the new supply stream.
“Australia has not seen that – for the last decade we have been under-building, which shows up in our very low rental vacancy rates and the upward pressure on rents."
This, he says, will put a floor under prices.
Oliver says that over the very long term property and shares have offered similar returns to investors – around 11% per annum – which suggests investors should hold both in their portfolios.
According to Tim Coates,  property investment adviser with Dixon Advisory, in addition to requiring special borrowing arrangements, SMSFs need a  plan to pay off their investment property.
Coates says such decisions to invest in property could be affected by the government reducing the tax concessional contribution limits from $50,000 to $25,000.
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SMSFs are right to be cautious on investing in property: AMP’s Shane Oliver

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Ever since the global financial crisis hit there has been an upsurge in self-managed super funds (SMSFs), as many managed super funds recorded big losses, along with people's hard-earned retirement savings.
Super funds invest in income-bearing vehicles with the goal of producing investments that their members or beneficiaries can retire comfortably on, however they tend to charge fees and make the investment decisions. While many may not know it, these same goals can be achieved (and sometimes more effectively) by managing one’s own super fund.
Managing one’s own super fund allows the beneficiary to take control of where funds are invested, be it in managed funds, share-related investments, bank or term deposits or property, making self-managed super funds the ideal vehicle to build retirement wealth, especially through property.
Property investing is the backbone of most successful funds, and when it comes to managing your own super fund, the same holds true. Making it even more attractive is the fact your personal SMSF can invest in both residential property and in commercial property – even the premises that house your own business.
For those who need assistance to set up or manage their own SMSF, there are numerous services and consultants that can help with establishing and auditing an SMSF. These range from online services and financial advisories to specialist firms.
Most people’s real wealth is created directly or indirectly through or via property.  So why put your hard-earned cash under someone else’s control when we can help you set up a SMSF and  put your hard-earned cash in solid foundations of bricks and mortar?
With one in five Australian households owning an investment property, it’s surprising that less than 4% have used their superannuation to buy one. This means that many people are missing out on the great opportunity to invest in direct property using their super fund. Imagine selling your investment property in retirement, say in 10, 20 or 30 years’ time, and not having to pay any capital gains tax.
Superannuation is an effective way for Australians to invest, and it is taxed at 15% only. Capital gains tax is 10% if the investment is held for more than 12 months or nothing  if sold in pension phase. There is nothing outside of superannuation that can compete with this favourable environment. On the back of these parameters, a superannuation strategy with property becomes one of the best investment options available to Australian’s today.
 
<hr class="system-pagebreak">
 
Properties held in super could have strong cashflow models because up to four members can pool their employer contributions into the one investment fund.
No doubt, property investing in personal names outside of super is already a lucrative strategy, however doing the same with a SMSF is like turbo-charging your investment. SMSF loans are paid down much faster, there is almost no drag on returns the investment can also be leveraged to maximise future upside value.
While saving on fees that usually apply to managed funds is an obvious benefit, it’s the ability to control the investments in one’s SMSF that has motivated many Australians to take charge of their own super fund. With your own SMSF, you will have full control and flexibility with regard to your investment choices. And, additional contributions to one’s SMSF such as wage sacrifice will reduce tax payable on income and increase the investment power of the fund.
Generally, there is no set minimum balance that a super fund needs to have in order to be self managed, but one rule of thumb is that your balance should be greater than $50 000 to $100 000. In other words, the cost of managing, auditing and administrating a SMSF should be in proportion to the balance.
Establishing a SMSF can be a great vehicle to build a property portfolio that enjoys considerably lower taxation while offering greater flexibility and the scope to create wealth for retirement on solid foundations.
Robert Projeski is a leading property finance expert and the founder and managing director of <a href="https://%20www.amo.com.au" target="_blank">Australian Mortgage Options</a>. He has appeared on radio and TV and written extensively on property and finance matters.
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Self-managed super the ideal vehicle to build wealth through property investment

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Australian Securities and Investments Commission needs to clamp down on rogue self-managed super fund (SMSF) advisers, according to wealth advisory group Chan &amp; Naylor.
Its director of financial planning, David Hasib, says the relatively new nature of SMSF products means regulation is lagging behind.
“Australia’s financial landscape has grown dramatically in its diversity and complexity over the years, yet education requirements for advisers have lagged,” says Hasib.
“It should not be acceptable to play the role of financial adviser in the general sense – the industry is evolving so quickly that it requires specialised advisers that are up to date and add real long-term value to clients.”
He says a lack of regulation means anyone can be an SMSF adviser and many don’t advise clients of potential pitfalls of SMSFs.
“A quick internet search will reveal the growing numbers of online spruikers, bearing no relevant qualifications at all, who are cashing in on the new SMSF market,” says Hasib.
“The problem is detrimental to those on the receiving end of uninformed advice, as well as the reputation and integrity of an otherwise healthy industry which will find itself tarred with the same brush.”
He recommends minimum qualification levels and increased professional development hours with penalties for those operate without them.
Andrea Slattery, CEO at SPAA, the peak body for SMSF advisers, says trustees should always seek out SPAA members for advice.
"There are so many people getting into the industry who see it as an opportunity and there's a need for trustees to seek out genuine specialists and SPAA members are the only ones who have undergone rigorous training," Slattery says.
Slattery says ASIC and the ATO are increasingly moving towards regulation for SMSF advisers.
"We believe there is a need for people to do more to work towards accreditation and to get recognition. The ATO have already increased their powers and will be increasing their further to regulate the sector."
"Right now there are people that are providing services in Australia that are not specialists and may not be competent with the complex rules around advice advice in SMSF and what we're trying to do is build integrity in the industry and advise trustees to use a specialist adviser."
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Clamp down on rogue SMSF advisers: Chan & Naylor

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Amid increasing pressure on trustees of self-managed super funds (SMSFs) to keep pace with the steady stream of quiet pronouncements from the ATO, we turn the spotlight on some overlooked SMSF guidelines in need of urgent reform in 2013. As a relatively young but rapidly evolving model, SMSF compliance guidelines contain more than their fair share of unnecessary and arbitrary rules. Some of these are discriminatory, lack logic or simply make the process of providing for independent retirement unnecessarily difficult. Chan &amp; Naylor has compiled the following list of 10 SMSF rules that themselves either require retirement or modification. The ATO must broaden the net of reform to ensure arbitrary SMSF ruling is afforded urgent review and the best interests of Australian investors are put first. 1) An SMSF must have no more than four members.
SMSFs are most often used to provide for retirement income for all family members, yet four trustee positions would not be enough to cater for the average Australian household. The figure should respond to the nation’s needs as opposed to forcing families to either leave family members out of the SMSF or pay to set up an additional fund. 2) An SMSF cannot borrow money to pay for improvements to a single acquirable asset.
Should a trustee require money to renovate a property, it cannot be loaned in an SMSF because it is considered to increase risk, though trustees are still allowed to borrow money to purchase that property or asset in an SMSF. 3) A person must pay to set up separate holding trusts per single acquirable asset with debt.
Instead of adding acquirable assets with debt into the same trust structure, trustees must pay to set up another. 4) Life insurance (which is tax-deductable in super) cannot be moved from an individual name to a self-managed superfund unless the existing policy is cancelled and reissued.
Those who experience a change in circumstances while doing so, such as entering a new age group or different health, could find their new policy does not provide the same cover as their previous insurance policy, or worse still, cannot be re-written. 5) If a person is insured in super, they can only claim tax deductions for TDP (total and permanent disability) provided they are unable to work in any occupation. 
This should also apply for a person’s own occupation. 6) It is prohibited to buy residential property or unlisted shares through an SMSF from a related party (wife, family member, etc.), even if supported with a registered valuation.
It is, however, acceptable to do the same with commercial property or shares. As long as the sole purpose test is passed there should be no limitation on from whom the asset is purchased if executed at arm’s length. 7) After the age of 65, a trustee is no longer entitled to the three-year average contribution.
This is age discriminatory. Anybody should be able to benefit from the three-year average contribution entitlement regardless of age. 8) Once a trustee reaches the age of 75, he or she may no longer contribute the full super contribution limit of $25,000 per annum.
This rule is discriminatory, especially as more Australians are both living and working for longer. 9) SMSFs must pay for manual amendments with each change to the SIS Act.
However, the big superfunds, covered by their associations, adopt legislation changes automatically. An SMSF deed, through legislation, should automatically pick up any changes to the SIS Act. 10) Trustees can suffer destructive penalties of up to 93% on over-contributions.
Excessive penalties should be axed for genuine errors.
Ken Raiss is a certified accountant and director of <a target="_self" href="https://www.chan-naylor.com.au/" title="Chan &amp; Naylor ">Chan &amp; Naylor</a> national accounting firm. Chan &amp; Naylor offers a free five-minute question-and-answer session on its website under the<a target="_blank" href="https://www.chan-naylor.com.au/ask-the-experts/"> "Ask the Experts" section.</a>
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The 10 SMSF rules that need urgent reform: Ken Raiss

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With the ability to negatively gear property in superannuation while still at work against your personal tax, more people are looking at this strategy to improve their lifestyle in retirement.   This ability to buy property, which will be tax free in your retirement, can greatly boost your future income. However, many people take shortcuts that reduce the upside of this strategy and unfortunately,  in some cases, unintended costs are triggered. To maximise the strategy, four key steps are necessary.
<ol>
<li>
Talk to your specialist SMSF accountant or financial planner to ensure the property you are looking at is allowable. In summary, borrowings can be used to purchase, repair, and fund interest expenses. Cosmetic renovations (not an improvement) are permitted with borrowings, and while you can improve a property by adding floor space, granny flat, etc, this must be done using SMSF cash. Off-the-plan purchases are allowable, but not the purchase of land and the subsequent construction of the building. During this talk you can discuss the rollover from other super funds and any insurances etc., you may need.</li>
<li>
Get pre-approved finance. In many instances the banks will require a financial planner to sign off on your SMSF strategy, but this is normally a relatively simple thing. You may need to top up your super if you do not have sufficient deposit etc., but you can lend money to your SMSF from say cash or equity from outside super. As this is not a super contribution, there is no limit on the amount, and it can be repaid prior to retirement.</li>
<li>After steps one and two are complete you can then put in place the paperwork. Caution is needed, as not all suppliers of the required documents are equally skilled. If you are lending money to your SMSF then you need these documents, and it is also advisable to complete additional documents as in many states a future second stamp duty on the property may be payable if all required documents are not completed.</li>
<li>Now the fun stuff: go out and secure the property.</li>
</ol>
 
The above may look intimidating, but it is just administration that your specialty advisor will help you with and for most people, it’s no more daunting than the process of purchasing the property; it’s simply just some “extra paperwork”. The ability to leverage property in super can be very beneficial, but ensure you follow these relatively simple rules to maximise your benefits.
Ken Raiss is a certified accountant and director of <a title="Chan &amp; Naylor " href="https://www.chan-naylor.com.au/" target="_self">Chan &amp; Naylor</a> national accounting firm. Chan &amp; Naylor offers a free five-minute question-and-answer session on its website under the<a href="https://www.chan-naylor.com.au/ask-the-experts/" target="_blank"> "Ask the Experts" section.</a>
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Four key steps to maximising your property investment through your SMSF

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Rarely has there been such a concerted warning from financial regulators as we've seen in recent days about the exposure of the self-managed superannuation fund industry to investment property markets. It has now emerged as the first financial regulatory test of the new government.

For those with a memory longer than five minutes -- which doesn't seem to include Assistant Treasurer Arthur Sinodinos, based on his <a href="https://www.afr.com/p/national/economy/liberals_question_diy_super_amid_Qe0JyGDpATUuISvpx5Wd0N" target="_blank">comments in the Financial Review</a> yesterday -- it's a problem dripping with irony and big risks.

As the RBA went to some lengths to explain in Wednesday's second <a href="https://www.rba.gov.au/publications/fsr/2013/sep/pdf/0913.pdf" target="_blank">Financial Stability Review</a> of the year, this is a problem that successive federal governments have created. The RBA explains a series of legislative steps and other changes from 2006 up to 2010 that cleared the way for self-managed super funds to step up their investment in property, especially geared residential property.

The central bank said Australian households continued to show prudence in managing their finances compared with 10 years ago, with a higher rate of saving and a slower pace of credit growth. This included taking advantage of low interest rates by paying down their existing mortgage debts and other debt.

But (and there's always a but or 20 in documents like this) "[t]here are some signs that households are taking on more risk in their investment decisions,'' the RBA said. "The potential for a further increase in property gearing in self-managed superannuation funds is a development that will be monitored closely by authorities for its implications, both for risks to financial stability and consumer protection." The bank said the same in last week's RBA board minutes -- the broader context for the RBA's concern is the revival in housing price growth:

"An increase in housing market activity more generally is not surprising given reductions in interest rates. However, it is important that those purchasing property maintain realistic expectations of future dwelling price growth. In contrast to the decades leading up to the crisis -- when dwelling prices grew rapidly in response to disinflation and financial deregulation -- long-run future growth in dwelling prices might be expected to be more in line with income growth."

And to underline the importance of self-managed super funds, which now have around a fifth to a quarter of their assets in property, the RBA <a href="https://www.rba.gov.au/publications/fsr/boxes/2013/sep/d.pdf" target="_blank">devoted separate article to them</a> and this explanation in the report's foreword:

"In this issue of the Review, a particular focus has been placed on the self-managed superannuation fund (SMSF) sector. Although this sector does not currently pose material risks to financial stability, it is important for the financial position of the household sector and has a number of aspects that warrant careful observation in the period ahead. Changes to legislation in recent years have permitted superannuation funds, including SMSFs, to borrow for investment, for example to purchase property."

What changes? The Howard government (when Sinodinos was Howard's chief of staff) established "Choice of Fund" for super in July 2005 in an effort to undermine the industry super sector; it allowed individuals to choose which superannuation funds, including an SMSF, their employer’s superannuation guarantee contributions are paid into. The 2007 "Simplified Superannuation" legislation eliminated tax on super benefits for over-60s and for a limited period encouraged individuals to pump up to $1 million into their super funds, which massively inflated member contributions to self-managed funds. And in 2010, borrowing rules were clarified to protect other assets in self-managed funds if funds had borrowed money to purchase assets, which had been permitted by the 2007 changes.

As the bank notes, these changes all drove SMSFs toward property investment:

"Since then, property holdings by SMSFs have increased and this type of investment strategy is being heavily promoted. The sector therefore represents a vehicle for potentially speculative demand for property that did not exist in the past. SMSFs and other retail investors have also been the dominant class of purchasers of hybrid securities recently. These investors seem to have been attracted by the higher yields offered on hybrids compared with conventional debt securities; it is important that they fully appreciate and price in the risks embedded in these more complex products."

As the history of legislative change makes clear, SMSFs are a favoured sector of the Coalition and its media cheerleaders. The Right might like retail super funds because they keep a diehard Liberal constituency, financial planners, rolling in fees, but they're ultimately run by AMP and the big banks. SMSFs have the air of rugged individualism about them. Judith Sloan, for example, <a href="https://www.theaustralian.com.au/opinion/columnists/unions-play-politics-with-super-funds/story-fnbkvnk7-1226524486152" target="_blank">has repeatedly suggested</a> that industry super funds have been "haemorraghing" members and money to SMSFs (when it's actually retail funds that have been losing out -- <a href="https://www.apra.gov.au/Super/Publications/Documents/June%202013%20Quarterly%20Superannuation%20Performance.pdf" target="_blank">the most recent APRA data</a> for 2012-13 shows industry super increasing market share while retail funds go backwards and SMSFs have been flat).

And Mathias Cormann, who was shadow assistant treasurer in opposition, used to spruik SMSFs. <a href="https://www.mathiascormann.com.au/speeches/CEDASpeech13.pdf" target="_blank">In May this year</a> he rejoiced in how "[a] growing number of Australians are taking advantage of the opportunities they perceive from self-managed super," Cormann said. "It gives you more control, it gives you choice, it gives you the opportunity to tailor your investment strategies for retirement according to your individual needs, but it also of course can come with increased risk."

Ah -- the increased risk -- especially given SMSFs are not entitled to compensation if they are the victims of theft or fraud in APRA-regulated funds. Cormann was unhappy that the previous government had left SMSFs out of compensation for the victims of the Trio fraud in which investors in APRA-regulated funds were ripped off. "In all of the circumstances, we do believe that there is a case for the government to look more closely as to whether there would be some justification for a level of compensation, if not for the full amount of the loss, but at least a level of compensation."

Cormann didn't take the bait offered at the time and back a general compensation arrangement for SMSFs -- he was only applying it to the Trio circumstances. But with SMSFs rushing into property -- and particularly riskier commercial property -- you can bet the heat will be on if a big property collapse burns a lot of SMSFs. And that heat will not merely be on politicians, but on anyone nearby with deep pockets -- which will mean the banks.

Sinodinos is now singing a different tune to Cormann's. He hasn't lauded the surge in SMSFs as the triumph of Howardesque aspirationalism and choice; instead he described it as "[o]n one level ... quite understandable". However, "we have to make sure that no matter what the vehicle is, it’s done in such a way that the ultimate objective is to preserve and maximise the savings for retirement. In the super space we need to make sure it’s a level playing field and that you get appropriate competition between the different funds, the industry funds, the self-managed super funds and that’s the starting point."

Perhaps Sinodinos forgot he was "present at the creation" of this issue back in 2005. But he, or at least the Treasury advisers who will have been briefing him over the last week, have worked out that SMSFs' exposure to the property sector contains the seeds not merely for a lot of angry victims but for a systemic problem: if the SMSF sector's $80-100 billion in property investments goes bad, the impacts will be felt well beyond retirees, into the banks and the entire property market.

<hr>
This article originally appeared on <a target="_blank" href="https://www.crikey.com.au">Crikey</a>.
 

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Coalition changes its self-managed super tune as regulators fret

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Self-managed super funds (SMSFs), also known as DIY super funds, have been in the news lately regarding their alleged propensity for borrowing to invest in property.
Proponents of both sides of the argument have put forward their case and, needless to say, the sector will continue to come under scrutiny from the regulators, including the ATO and ASIC.
For its part, as the main regulator of SMSFs, the Tax Office says it tries to help super fund trustees and the professionals who assist them to <a href="https://www.smartcompany.com.au/big-money/057730-big-money-the-reason-our-superannuation-system-doesn-t-work">understand their obligations</a>(and there are plenty of those!) and comply with these voluntarily.
While the ATO considers that SMSFs “generally operate in a well-run market”, ATO assistant deputy commissioner in charge of superannuation Stuart Forsyth says there are however a number of risk areas it is keeping an eye on. These include:
<ul>
<li>
Trustees and SMSF professionals who fail to understand SMSF obligations
</li>
<li>
Trustees who fail to voluntarily comply with their SMSF obligations, including lodgement of returns
</li>
<li>
Approved SMSF auditors who fail to undertake audits appropriately or fail to report contraventions of the rules to the ATO
</li>
<li>
Trustees who intentionally take inappropriate actions with their SMSFs, such as setting them up for illegal early release or down the track obtaining early access to money in the fund without meeting a condition of release
</li>
<li>
Professionals who promote and assist in the establishment of SMSFs for inappropriate reasons
</li>
</ul>
SMSFs have a myriad of rules to comply with. These include reporting of payments of fund member benefits, appointing an approved auditor, and maintaining the appropriate records. In the current environment, perhaps the most notable requirement is complying with the numerous investment restrictions that the law imposes, for example:
<ul>
<li>
The ‘sole purpose test’ – the law requires an SMSF to be maintained solely for at least one of the legislated core purposes, i.e. the provision of benefits upon retirement, attaining age 65 or death.
</li>
<li>
Trustees of an SMSF are prohibited from intentionally acquiring assets from fund members or a related party (although some limited exceptions apply).
</li>
<li>
An SMSF is generally restricted from having more than 5% of its total assets invested in so-called ‘in-house’ assets – these include a loan to a related party, an investment in a related trust of the fund, and an asset of the fund subject to a lease with a related party.
</li>
</ul>
The law generally prohibits funds from borrowing money, but there is an exception for so-called limited recourse borrowing arrangements (e.g. instalment warrants). Assets acquired with these borrowings must be kept separate from other assets of the fund. Money borrowed under these rules can be used in maintaining or repairing an asset. An SMSF trustee looking to acquire property via a limited recourse borrowing arrangement should obtain independent advice in relation to the borrowing agreement and the establishment of the holding trust structure.
Forsyth said the ATO is planning more comprehensive audits and closer scrutiny of annual returns and auditor contravention reports. He said the annual independent SMSF audit is a critical factor in the ongoing tax concessional treatment of SMSFs, satisfying the government and the community that SMSFs are meeting their obligations.
Forsyth said SMSF trustees should comply, lodge on time and (reflecting the comments made above) ensure that transactions such as limited recourse borrowing arrangements are undertaken with care. Limited recourse borrowing is an area where there are risks of breaches which can be very expensive and may not be easily rectified if professional advice had not been sought, he said.
SMSF fund trustees should check and understand the deed of the fund to ensure they are clear in what it allows and does not allow.
The ATO will review breaches of trustee obligations reported to it by approved SMSF auditors.
Other issues for SMSF trustees to be aware of are that they are now are required to value their fund’s assets at market value. They must also regularly review the fund’s investment strategy, and should consider the needs of insurance for members. The ATO is sure to be checking on these requirements.
One of the main changes affecting SMSF trustees this year has been that, from July 1, 2013, auditors have had to be registered with ASIC to undertake an SMSF audit. Forsyth said that from now on, when an SMSF annual return is lodged with the ATO, the ATO will check that the return has an SMSF auditor number (SAN) on it and that the number has been registered by ASIC. If there is no SAN or the number is not recognised as a registered auditor, the ATO will not accept the lodgment. SMSF trustees need to be particularly careful about this requirement.
From July 1, 2014, large and medium employers (those with more than 20 employees) will start paying super contributions using the new superannuation data and payment standard. SMSFs receiving contributions from these employers will need to receive them using the new standard. This requires being able to receive electronic contribution payments (paid to a nominated bank account) and messages (sent to a nominated electronic address). The ATO intends to publish more detailed information explaining the standard, how it applies to SMSFs and what trustees need to do to comply.
The attractions of SMSFs mean we are seeing continuing strong growth in these types of super funds. The many rules and regulations surrounding the running of these funds however should not be overlooked or underestimated.

<hr>
Terry Hayes is the editor-in-chief of tax news reporting at <a href="https://www.thomsonreuters.com.au/" rel="nofollow">Thomson Reuters</a>, a leading Australian provider of tax, accounting and legal information solutions.
This article originally appeared on <a href="https://www.smartcompany.com.au/" target="_parent" rel="nofollow">SmartCompany</a>.
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