SMSFs and the Compensation Scheme of Last Resort | the Advisory

Why It Matters

These reforms raise compliance costs and liquidity considerations for SMSF trustees while strengthening safeguards for retirement savings, reinforcing confidence in Australia’s super system.

Key Takeaways

• Treasury may require SMSFs to contribute to compensation scheme.
• Opt‑in/opt‑out choice determines future claim rights for members.
• New “payday super” rule forces faster employer contributions.
• SMSF accounts must support real‑time payment systems by June.
• ATO will not forgive SMSF loans to family or businesses.

Summary

The advisory discusses Treasury's proposal to involve self‑managed super funds (SMSFs) in a compensation scheme of last resort, and related regulatory changes such as the upcoming “payday super” rule.

Key points include potential mandatory contributions from SMSFs, an opt‑in/opt‑out mechanism that affects claim eligibility, and the shift to a user‑pays model across the superannuation ecosystem. The new rule requires employers to deposit super within seven working days, prompting SMSF trustees to ensure their cash‑management accounts can receive real‑time payments.

Liam Short emphasizes that older bank accounts may lack the necessary infrastructure and advises upgrading before June. He also warns that the ATO will not excuse breaches where SMSF funds are lent to relatives or businesses, though early voluntary disclosure can mitigate penalties.

For advisors and SMSF trustees, compliance will demand operational upgrades and stricter governance, while the broader superannuation landscape moves toward greater protection for members and reduced reliance on government bailouts.

Original Description

Key Points:

Treasury’s compensation scheme funding model and possible impact on SMSFs

Superannuation tax benefits and salary sacrifice strategy for different income levels

Structuring retirement income using tax-free pensions, non-super savings and Age Pension

Payday super implementation and NPP requirements for SMSFs

ATO treatment of SMSF loans to family or business and importance of early disclosure

Liam Shorte from SONAS Wealth outlines concerns around Treasury’s consultation on funding the Compensation Scheme of Last Resort, particularly for self-managed super funds (SMSFs). Shorte states that the government appears to be shifting further towards a user-pays model, with rising fees across superannuation, company charges and ATO reviews. He suggests SMSFs may face options to either contribute to the scheme or opt out, but if they opt out, they may forfeit access to compensation if something goes wrong.

Shorte maintains that, despite frequent rule changes, superannuation remains the most tax-effective structure for most Australians earning between $45,000 and above $200,000. He highlights that salary sacrifice can create immediate tax savings, arguing that this is effectively a “guaranteed” return. He urges those from their mid‑50s to understand how tax-free super pensions from age 60, tax-free thresholds on non-super savings and the Age Pension can combine to create sustainable retirement income.

On upcoming payday super changes, Shorte stresses that SMSF trustees must ensure their bank accounts are NPP-enabled to receive contributions within seven days. He warns that lending from an SMSF to family or business is a serious breach, with the ATO unable to forgive such transactions, and encourages early voluntary disclosure where mistakes occur.