Australia’s superannuation system has long been considered one of the most robust in the world. But as the landscape evolves, so do the challenges, particularly for self-managed superannuation funds (SMSFs) and asset-rich retirees.
Recent regulatory proposals, such as the Division 296 Super Tax, reflect a broader strategy aimed at rebalancing the tax advantages of super against its original intended purpose: to provide Australian taxpayers with financial independence and security in their retirement.
These changes are not punitive but corrective, designed to address how superannuation is increasingly used as a wealth preservation tool rather than a retirement income stream.
Some interesting statistics
The ATO has provided some interesting statistics on the self-managed super fund (SMSF) sector.
- Total of 638,411 SMSFs
- 1,184,287 individuals are members of SMSFs
- Total estimated assets of SMSFs are $1.02 trillion.
Top Asset Types Held by SMSFs (by Value)
- listed shares (27% of total estimated SMSF assets)
- cash and term deposits (17%)
- unlisted trusts (13%)
- non-residential real property (11%)
- limited recourse borrowing arrangement (7%)
- residential property (6%)
- listed trusts (6%)
The gender and age profile of SMSF members further contextualises who these reforms are likely to impact. Notably, 85% of SMSF members are aged 45 and above, underlining the importance of succession planning and liquidity management as trustees approach or enter retirement.
Asset Value Distribution Highlights
The distribution of asset classes changes significantly across fund sizes. For example:
- Smaller funds (under $200k) are heavily weighted toward cash and term deposits (up to 48%) and listed shares (over 20%).
- Larger funds (over $5m) demonstrate more diversification with higher allocations to unlisted trusts, non-residential real property, and listed equities.
This reinforces how asset complexity and risk exposure grow with fund size, making valuation accuracy, liquidity events, and compliance obligations more critical for trustees of large SMSFs.
2022-23 | |||||||||||
Asset Type | $1 to $50k | >$50k to $100k | >$100k to $200k | >$200k to $500k | >$500k to $1m | >$1m to $2m | >$2m to $5m | >$5m to $10m | >$10m to $20m | >$20m to $50m | >$50m |
Listed trusts | 1.7% | 2.5% | 3.9% | 5.9% | 6.7% | 7.5% | 6.6% | 5.6% | 4.7% | 3.2% | 2.2% |
Unlisted trusts | 2.1% | 5.1% | 7.9% | 8.0% | 7.7% | 10.0% | 12.6% | 14.8% | 16.9% | 20.6% | 18.0% |
Insurance policy | <0.1% | <0.1% | <0.1% | <0.1% | <0.1% | <0.1% | <0.1% | <0.1% | <0.1% | <0.1% | 0.0% |
Other managed investments | 0.9% | 1.7% | 2.7% | 4.3% | 5.1% | 6.4% | 6.8% | 6.2% | 5.7% | 4.6% | 3.7% |
Cash and term deposits | 48.0% | 41.0% | 39.8% | 29.6% | 20.2% | 19.1% | 17.0% | 14.5% | 13.1% | 12.4% | 10.9% |
Debt securities | 0.1% | 0.3% | 0.3% | 0.5% | 0.7% | 1.1% | 1.4% | 1.6% | 1.7% | 2.0% | 1.0% |
Loans | 1.1% | 2.1% | 2.5% | 1.1% | 0.5% | 0.5% | 0.5% | 0.7% | 1.0% | 1.6% | 2.1% |
Listed shares | 19.2% | 21.3% | 20.6% | 22.9% | 22.9% | 27.4% | 29.3% | 29.6% | 29.0% | 22.4% | 23.2% |
Unlisted shares | 1.7% | 2.1% | 2.6% | 1.5% | 0.8% | 0.8% | 0.9% | 1.5% | 2.3% | 4.0% | 7.5% |
Limited recourse borrowing arrangements | <0.1% | 0.1% | 0.4% | 9.0% | 17.9% | 8.4% | 3.7% | 3.0% | 2.7% | 4.2% | 9.0% |
Non-residential real property | 0.3% | 0.7% | 1.4% | 4.1% | 5.7% | 7.9% | 10.9% | 13.1% | 13.6% | 14.3% | 10.3% |
Residential real property | 0.7% | 1.6% | 2.2% | 5.2% | 7.5% | 7.0% | 5.7% | 4.1% | 3.0% | 1.8% | 2.8% |
Collectables and personal use assets | 0.3% | 0.6% | 0.5% | 0.3% | 0.1% | 0.1% | <0.1% | <0.1% | 0.1% | <0.1% | 0.0% |
Other assets | 10.5% | 9.5% | 7.9% | 4.4% | 2.5% | 2.3% | 2.3% | 2.6% | 2.5% | 3.6% | 4.5% |
Crypto-Currency | 10.2% | 7.9% | 4.2% | 1.1% | 0.2% | 0.1% | 0.0% | 0.0% | 0.1% | <0.1% | 0.9% |
Overseas shares | 2.6% | 2.7% | 2.1% | 1.4% | 1.0% | 1.2% | 1.5% | 2.0% | 2.8% | 4.0% | 2.7% |
Overseas non-residential real property | <0.1% | 0.1% | 0.1% | <0.1% | <0.1% | <0.1% | <0.1% | <0.1% | <0.1% | 0.2% | 0.0% |
Overseas residential real property | 0.2% | 0.4% | 0.4% | 0.2% | 0.1% | <0.1% | <0.1% | <0.1% | <0.1% | <0.1% | 0.0% |
Overseas managed investments | 0.1% | 0.1% | 0.2% | 0.1% | 0.1% | 0.1% | 0.2% | 0.3% | 0.4% | 0.8% | 0.7% |
Other overseas assets | 0.2% | 0.3% | 0.3% | 0.2% | 0.2% | 0.2% | 0.2% | 0.3% | 0.4% | 0.6% | 0.5% |
Total | 100% | 100% | 100% | 100% | 100% | 100% | 100% | 100% | 100% | 100% | 100% |
Source: ATO SMSF quarterly statistical report December 2024
tables contain the distribution of assets held by SMSFs of different sizes, based on total fund assets. These tables are based on actual return data for the 2023 financial year.
Proportion of funds by number of members (%) | |
Number of members | 2022-23 |
1 | 25.1% |
2 | 68.1% |
3 | 3.3% |
4 | 3.3% |
5 | 0.2% |
6 | 0.1% |
Total | 100% |
Source: ATO SMSF quarterly statistical report December 2024
Table shows the distribution of SMSFs based on the number of members.
Members, by gender and age range | |||
Age ranges | Male | Female | Total |
< 25 | 0.6% | 0.6% | 0.6% |
25–34 | 2.7% | 2.7% | 2.7% |
35–44 | 11.3% | 12.1% | 11.7% |
45–49 | 9.3% | 9.4% | 9.3% |
50–54 | 11.8% | 12.4% | 12.1% |
55–59 | 12.0% | 12.6% | 12.3% |
60–64 | 13.0% | 13.2% | 13.1% |
65–69 | 11.7% | 12.0% | 11.8% |
70–74 | 10.4% | 10.5% | 10.5% |
75–84 | 14.1% | 12.6% | 13.4% |
85+ | 3.2% | 2.1% | 2.7% |
Total | 100% | 100% | 100% |
All ages | 52.6% | 47.4% | 100% |
Source: ATO SMSF quarterly statistical report December 2024
This table contains the age distribution of individuals who were members of SMSFs as at the end of June 2024.
Proportion of assets, by asset range of fund | |
Asset Ranges | 2022-23 |
$0 to $50,000 | <0.1% |
>$50,000 to $100,000 | 0.1% |
>$100,000 to $200,000 | 0.5% |
>$200,000 to $500,000 | 4.0% |
>$500,000 to $1m | 11.8% |
>$1m to $2m | 20.7% |
>$2m to $5m | 31.9% |
>$5m to $10m | 16.3% |
>$10m to $20m | 8.6% |
>$20m to $50m | 4.0% |
>$50m | 2.0% |
Total | 100% |
Source: ATO SMSF quarterly statistical report December 2024
the proportion of total assets that are held by SMSFs of different sizes (based on their asset range).
So, why does this approach work, and what does it mean for SMSFs?
A Refresher: SMSFs and Their Appeal
SMSFs allow individuals to take direct control of their super investments, with flexibility to invest in a wide range of assets including:
- Direct property (residential or commercial)
- Shares and managed funds
- Collectibles and alternative assets
- Business real property
Because of their control and tax advantages, SMSFs have become particularly popular among high-net-worth individuals, with some balances exceeding tens of millions of dollars.
But herein lies the concern: Is superannuation serving its intended purpose, to fund retirement for everyday Australians, or is it becoming a tax shelter for the wealthy?
Why the New Measures Make Strategic Sense
1. Targets the Exception, Not the Average
The Division 296 Super Tax only applies to individuals with total super balances above $3 million, which equates to fewer than 0.5% of all super members.
This threshold helps protect the integrity of the system without burdening the majority. The approach aligns with principles of vertical equity, where higher earners or holders of larger asset pools are taxed more progressively.
Yet, concerns exist: the lack of inflation indexation for the $3 million threshold may pull more members into the tax net over time, unless future adjustments mirror CPI-linked updates applied in income tax brackets. Legislative clarity on this point will be critical to ensure fairness is preserved.
2. Encourages More Strategic Asset Planning
Large SMSFs that hold illiquid or difficult-to-value assets, such as property, private companies, or unlisted investments, face unique challenges when calculating earnings for tax purposes.
The Division 296 framework shifts attention to total earnings, including unrealised capital gains, prompting trustees to:
- Reconsider whether illiquid assets are suitable for the fund’s phase (accumulation vs. pension)
- Conduct frequent, defensible valuations to avoid tax estimation errors
- Improve liquidity buffers to fund future tax liabilities, especially in the case of death or pension commencement
This encourages a more professionalised and actuarial approach to SMSF portfolio management.
3. Closes Unintended Loopholes
Historically, SMSFs with high balances in the pension phase could legally generate substantial income with zero tax liability. This includes capital gains from property and shares, creating what many see as an unintended tax shelter within the super framework.
By applying a flat 15% tax on a portion of earnings above the $3 million threshold, the government aims to:
- Deter excessive tax arbitrage via super
- Ensure high-income retirees contribute proportionally
- Restore horizontal equity across similar-income Australians who do not or cannot use SMSFs
Asset Planning Concerns: Real and Growing
Many SMSF trustees are now asking:
- Do I need to rebalance into more liquid assets?
- What happens when an unrealised gain becomes taxable?
- Is my estate plan still valid under these new rules?
These are not minor questions. The new regime introduces notional taxation, where paper gains on properties or unlisted assets could lead to actual tax bills. This compels trustees to reconsider:
- Use of corporate vs. individual trustees
- Timing of asset sales, pensions, and re-contributions
- Need for independent valuations and expert tax advice
Strategic asset planning has moved from a “best practice” to a compliance imperative under Division 296.
Why This Direction Benefits the System
Ultimately, targeting SMSFs and addressing planning inefficiencies works because it:
- Maintains the integrity of the superannuation system
- Redistributes tax benefits more equitably across asset and income classes
- Reduces systemic risk from large, under-diversified retirement funds
- Improves fiscal sustainability by limiting concessional tax erosion
Contrary to common criticisms, this reform is not a penalty on wealth. It’s a correction of structural imbalances. Superannuation was never meant to be a limitless estate planning vehicle. As Australia’s population ages and health lifespans increase, the cost of retirement support also rises. Ensuring the long-term resilience of the super system is in everyone’s interest.
Final Thoughts
The spotlight on SMSFs and asset planning isn’t about discouraging independence or limiting investment choice. It’s about building a fairer, more sustainable system that meets the retirement needs of all Australians, not just the wealthiest.
For SMSF members and advisers, this is a moment of reflection and recalibration. With professional advice and a forward-looking strategy, trustees can still unlock the full value of self-management, while staying compliant with the evolving rules of super.
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Disclaimer: We endeavour to make sure the information provided in this guidance is up to date and accurate. Please note, that the information is only intended to be a guide, with a general overview of information. This guidance is not a comprehensive document and should not be interpreted as legal advice or tax advice. The information is general in nature. You should seek the assistance of a professional opinion for any legal and tax issues related to your personal circumstances.
