Proposed SMSF Reforms: What Trustees Need to Know
More than $100 million of SMSF money was invested into Shield and First Guardian, two managed investment schemes whose collapses have prompted renewed scrutiny of consumer protections in superannuation. The government released a fact sheet in August 2026 outlining the proposed reforms under the Protecting Consumers in the Superannuation System (PCSS) measure, building on the recent 2026/27 budget. This discussion is not based on any legislation, but on a paper prepared for the superannuation and financial services industry for discussion purposes.
What reforms affect SMSFs?
- ATO preventing fraudulent rollovers to new SMSFs
It is proposed to give the ATO additional power to prevent rollovers to a new fund where there is suspicion of fraud, financial abuse, misconduct or potential financial harm to a member, proactively safeguarding retirement savings.
- Mandatory trustee education for new SMSF entrants
New trustees will be required to complete mandatory trustee education before the SMSF is registered which will now form part of the SMSF Setup process. The detail of what that education will involve has not yet been announced.
- Uniquely identifiable bank accounts
It is difficult to know what this will look like in practice, as the current process is to set up a bank account in the trustee’s name on behalf of the SMSF to demonstrate the fund’s ownership and to clearly separate the fund’s cash from the personal cash of the members (being the trustees) and from the cash of a corporate trustee or its directors. It is unclear whether this applies only to new funds or also to existing funds.
- Upfront investment strategy
Requiring SMSFs to have a written upfront investment strategy and exploring options by consulting with the financial services industry to improve the quality of investment strategies. The government has targeted SMSFs’ investment strategies for some time, so it will be interesting to see how it intends to implement this.
- Greater transparency for advice fees charged to set up a new fund
The ATO wants to know which financial adviser provided advice to set up the new SMSF. In addition, an SMSF will be required to identify any advice fees paid during the year as a separate line item.
- Increase in the annual SMSF supervisory levy
The ATO will increase the current SMSF Supervisory Levy of $259 to $295. The current levy has not been increased since the 2014/15 financial year. The first levy will now be paid upfront when the fund is established, rather than when the first annual tax return is lodged.
- SMSFs to contribute to the CSLR
SMSFs will contribute to the Compensation Scheme of Last Resort (CSLR) only when required, not automatically each year. The special levy is expected to be no more than $20 per levy period for an individual SMSF. Daniel Mulino, the Financial Services Minister, confirmed SMSFs will be subject to the levy in the 2026/27 financial year.
What is the CSLR?
SMSFs have accessed the CSLR since the CSLR commenced operations in April 2024. The scheme compensates SMSFs and other consumers who have lost money due to financial misconduct by financial service providers. To be eligible, the SMSF must have made a successful claim awarded by the Australian Financial Complaints Authority (AFCA) but never received the award, often because the provider went into liquidation. An SMSF can be awarded up to $150,000.
An example of an eligible SMSF claiming compensation under CSLR.
- The SMSF received advice from a licensed financial adviser, being a member of AFCA, to invest in the Shield Master Fund. Keystone Asset Management Ltd (KAM) was the responsible entity of the managed investment scheme. In December 2024, KAM’s creditors appointed liquidators to wind up the scheme, resulting in the SMSF losing a substantial amount of money.
- A formal complaint was made to AFCA, which determined that the financial adviser provided inadequate and misleading advice and compensation of $120,000 was awarded by AFCA to the SMSF. However, the financial services firm went into liquidation and could not pay the compensation.
- After letting AFCA know the compensation was not paid, a complaint was lodged with CSLR, which assessed the eligibility of the claim, made an offer of $90,000 in compensation, which was accepted and then paid to the SMSF.