Latest estimate and trends for SMSF illegal early access

SMSF illegal early access estimate

Self-managed super fund (SMSF) 'Illegal early access' refers to assets being removed from an SMSF early without a condition of release being met.

Superannuation savings are important to the community. They provide funds for people’s retirement. Even a small amount of illegal early access can have a significant impact on an individual's retirement savings.

For 2021–22, we estimate the SMSF illegal early access (asset gap) to be $250.1 million.

SMSFs estimate

An SMSF is a way of saving for retirement. The members run it for their own benefit. They make the investment decisions for the fund and are held responsible for complying with the tax and superannuation laws.

An SMSF must be run for the sole purpose of providing retirement benefits for the members. Additionally, all decisions made by members as trustee of their fund must be in the best financial interests of the members.

For 2021–22 (as at December 2024), there were 585,696 SMSFs, with total estimated assets of $843.7 billion.

About the estimate

The SMSF illegal early access estimate combines estimates for both non-lodging and lodging funds. It forms part of our overall tax and super performance program, and measures the ‘asset gap’ between:

• what should be held in super, and
• what is held in super.

We calculated the illegal early access estimate in a similar way to other gap estimate amounts of taxes that are not collected. See Australian tax gaps – overview.

Comparison with previous years

The 2021–22 SMSF illegal early access estimate of $250.1 million has decreased compared to the 2020–21 estimate of $256.1 million. Most of the decline has occurred in non-lodging funds.

This may be attributable to a range of factors, including:

• economic factors
• possible changes in compliance
• ATO actions.

Table 1 below shows that:

• Compared to the 2020–21 estimate, the 2021–22 estimate has reduced slightly by about $6 million, mainly due to a reduced estimate for the non-lodgers.
• The estimate as a percentage of total SMSF assets has remained stable at 0.03%.
• Over these 2 years, the total assets have increased by $7.0 billion.

Table 1: SMSF illegal early access of super estimates

Element	2019–20	2020–21	2021–22
Non-lodger population size	14,964	24,955	25,627
Non-lodger population illegal early access estimate ($m)	283.0	174.4	167.7
Lodger population illegal early access estimate ($m)	97.5	81.7	82.3
Combined illegal early access estimate ($m)	380.5	256.1	250.1
Combined total assets ($b)	720.5	836.7	843.7
Combined estimate as percentage of combined total assets	0.05%	0.03%	0.03%

Findings

Illegal early access is the most significant regulatory risk impacting the SMSF sector.

The estimate in both lodging and non-lodging funds is likely driven by a wide set of circumstances, such as:

• financial stress
• promoters and schemes
• lack of knowledge
• community attitudes to super.

The estimate for lodging funds is less than for non-lodging funds. This reflects enhanced controls, with these SMSFs being reviewed by approved auditors prior to lodgment.

The calculation estimates that 14.9% of the assets of SMSFs that never lodge have been early accessed. This contrasts with lapsed lodgers and lodgers, where the analysis showed only 0.44% and 0.01% respectively of assets leaving the system through illegal early access.

Total early access of $257 million consists of:

• estimated illegal early access of $250.1 million
• $6.9 million of legal early access, from
  • compassionate release
  • first home super saver (FHSS) scheme.

Therefore, illegal early access is estimated to comprise around 97% of total early access.

For more information, go to Self-managed superannuation funds illegal early access.