May 2024 Newsletter
In this edition, we walk you through what the next era of SMSFs might look like, how to take control of your money by smart budgeting, an explainer on how to go about a renovation budget, and a video summarising key market movements during July and August.
If you are interested in discussing the topics raised in this month’s newsletter, please don’t hesitate to contact us.
In the meantime, we hope you enjoy the read.
Self-managed superannuation funds (SMSFs) have long been associated with older Australians and small business owners looking for greater control over their retirement savings.
But recent data suggests the sector is undergoing a quiet transformation.
Alongside tax reforms and persistent compliance challenges, younger people are slowly moving into the SMSF space. While 85 per cent of SMSF members are 45 years or older, there’s been significant growth in members aged between 25 and 34 years from just 2.4 per cent two years ago to around 10 per cent now.i
Almost 8,000 new SMSFs were established in the three months to the end of March 2025 with the number of new members increasing by 13,000. Australia’s SMSFs hold an estimated $1.02 trillion in assets with 26 per cent invested in listed shares and 16 per cent in cash and term deposits.ii
The new Division 296 super tax, due to apply from 1 July 2025, is aimed at those with total superannuation balances exceeding $3 million. An extra 15 per cent tax will apply to earnings on the portion of a member’s balance above $3 million, effectively lifting the tax rate on those earnings to 30 per cent.
What makes Division 296 particularly contentious is the inclusion of unrealised gains. For example, a share portfolio the SMSF holds has seen positive returns. Trustees may face tax liabilities on paper profits, even if assets haven’t been sold. This may cause issues for SMSFs holding illiquid assets such as property or farmland that has increased in value.
SMSF Australia and other industry bodies have raised concerns about fairness, complexity and the potential for unintended consequences.
Trustees with high balances should begin planning now before 30 June 2026, to consider asset rebalancing, contribution strategies and the timing of withdrawals. SMSF Australia recommends obtaining advice about your specific circumstances.iii
Despite the increasing complexity of SMSF regulation, the vast majority of trustees continue to operate without professional advice. While the number of SMSFs using financial advisers has grown to 155,000, up from 140,000 in 2023, some 483,000 are not using a financial adviser.iv
This could lead to costly mistakes, especially when navigating contribution caps, pension strategies or related-party transactions. SMSF Australia says that while there’s no legal requirement to obtain advice from a licensed financial planner, “unless you have the skills and expertise to do this yourself, it is certainly conventional wisdom to do so”.v
Every SMSF must undergo an annual audit by an approved SMSF auditor. This includes verifying the fund’s financial statements and ensuring it is compliant with super laws. Trustees are also required to value all fund assets at market value as at 30 June each year, using objective and supportable data.
For property and other complex assets, valuations can be time-consuming and costly. The ATO recommends using qualified independent valuers when assets represent a significant portion of the fund or are difficult to assess. Auditors may request evidence such as comparable sales, agent appraisals or formal valuation reports.vi
Failure to maintain accurate records or provide sufficient documentation can result in audit delays, contraventions or penalties. Trustees must also ensure their investment strategy is regularly reviewed and documented, particularly when starting pensions or making significant contributions.
As the SMSF sector evolves, trustees face a dual challenge: adapting to new tax rules and maintaining rigorous compliance. For those considering an SMSF – or already managing one – the message is clear. Getting financial advice can give you peace of mind when the rules are regularly changing.vii
With Division 296 to contend with and a younger demographic stepping in, the sector is poised for both growth and greater scrutiny.
Whether you’re a seasoned trustee or just starting out, now is the time to review your fund’s structure, seek expert guidance and ensure your paperwork is in order. The future of SMSFs may be more dynamic than ever, but it will also demand greater diligence.
Contact us if you have any questions.
i Highlights: SMSF quarterly statistical report March 2025 | Australian Taxation Office
ii Self Managed Superannuation Funds – SMSF quarterly statistical report March 2025 – Data.gov.au
iii Understanding Div296 I How will taxation of unrealised gains work
v What are the rules for Financial Planners giving SMSF Advice? – SMSF Australia
vi SMSF administration and reporting | Australian Taxation Office
vii About SMSFs | Australian Taxation Office
Tracking your spending is a way to take control of your money. Knowing where your money goes can help you spend less and save more.
First, get a clear view of where your money is going day to day.
One week for daily spending
Start small by recording your spending every day for at least a week. This way you can see all the money going out.
Fortnightly or monthly for recurring expenses
If you have some weeks or months with more expenses, commit to a ‘financial fortnight’ or ‘money month’. Tracking over a longer period gives you a more realistic picture.
Get transaction statements
When you use a card or phone app to make a purchase, every transaction is recorded. Access these transactions through your online banking or hard-copy statements.
Use a phone app
An app is an easy way to track your spending at the time you spend. You can also set spending limits and reminders, and see your expenses at a glance.
Write it down
Record the amount, item (or store name) and date. Do this for both cash and card purchases as you spend. Or keep receipts and do your tracking at the end of the day.
Don’t worry about changing your spending habits straight away. Just record day by day.
To stay motivated, try tracking your spending with a partner or friend.
At the end of your tracking period, look at your recorded transactions to see where your money is going.
It may surprise you how much small things can add up. You could also discover hidden costs. For example, account fees, subscriptions you don’t use anymore, or mistaken transactions.
You often find that, just by being more aware of your spending, you can start to spend less.
If you want to spend more mindfully, try taking a moment before you buy something. Ask yourself: Do I need this right now? Can I get it cheaper somewhere else? This helps you be in control of your spending choices.
Now you know where your money goes, making small changes can make a big difference. You don’t have to do everything at once — pick one spending habit to start with.
Look at all your transactions and highlight what are ‘needs’ — essential items you need to live.
The ones left over are ‘wants’. These are the things you could cut back on or live without for a while, to save money. Is there anything you would like to change?
Cancel anything you don’t need, like a subscription or membership you’re no longer using. Or try cutting back on one small, frequent expense, like takeaway food.
With the money from your quick win, start saving for the things that matter most.
Set up a savings account or an emergency fund.
Knowing how much you spend on wants, try setting a realistic limit for the next week or month. This can help you avoid overspending.
Set calendar reminders for when regular expenses are due. Then put aside money to cover these payments.
Now you know where your money is going day to day, take it a step further and do a budget. This helps you prioritise where you want your money to go.
Having a budget lets you see how you’re going month to month, and year to year. So it is easier to stay on top of expenses and save for the things you enjoy.
For a step-by-step guide, see how to do a budget.
Reproduced with the permission of ASIC’s MoneySmart Team. This article was originally published at https://moneysmart.gov.au/budgeting/track-your-spending
Important note: This provides general information and hasn’t taken your circumstances into account. It’s important to consider your particular circumstances before deciding what’s right for you. Although the information is from sources considered reliable, we do not guarantee that it is accurate or complete. You should not rely upon it and should seek qualified advice before making any investment decision. Except where liability under any statute cannot be excluded, we do not accept any liability (whether under contract, tort or otherwise) for any resulting loss or damage of the reader or any other person. Past performance is not a reliable guide to future returns.
Important
Any information provided by the author detailed above is separate and external to our business and our Licensee. Neither our business nor our Licensee takes any responsibility for any action or any service provided by the author. Any links have been provided with permission for information purposes only and will take you to external websites, which are not connected to our company in any way. Note: Our company does not endorse and is not responsible for the accuracy of the contents/information contained within the linked site(s) accessible from this page.
Renovations can be an exciting time to re-shape the look and feel of your home, however before you start getting into the details, it’s important take a step back and clarify ‘why’ you’re renovating. For instance:
Do you need more space?
Is your kitchen too dated?
Are you looking to boost your home’s resale value?
Being clear about what you’re trying to achieve is a great first step to help you focus on your renovation costs. Once you know what you’re aiming for, start with a list of must-haves and nice-to-haves so you can prioritise what is essential and what is an optional extra.
Once you know what you’re looking to achieve, the next step is figuring out what you can afford. Take a good look at your finances and decide how much you’re comfortable spending without draining your savings. To help you plan, you can also use renovation and building calculators online to help you get a rough estimate of costs. If you think you’ll need to take on some debt, you have options like using equity, personal loans for renovation or construction loans. A personal loan borrowing calculator can offer some estimates on how much you can borrow. If you need support deciding, it’s best to get advice.
If you’re looking finance a large-scale renovation without dipping too deeply into your savings, tapping into your home’s equity can be an option. Home equity is essentially the difference between what your home is worth and what you still owe on your mortgage. You can borrow against the equity by topping up your existing home loan. Your lender will do a valuation of your property to determine equity available and how much you can borrow, while keeping your loan-to-value ration (LVR) within acceptable limits.
It’s important to be cautious that borrowing against your home’s equity means you’re taking on more debt, which in turn can carry more risk. That’s why it’s important to only borrow what you can repay and make sure your renovations boost your home’s value.
If you’re doing a big renovation or extension, you need plans and designs that you can get proper quotes on. Start by getting quotes from multiple builders or tradespeople, as it’s a great way to make sure you’re getting the best deal you can. You’ll be surprised how much these quotes vary. Also consider the contractor’s experience, how well they communicate as well as reviews and recommendations from friends and family.
Review the costs of labour, materials, and any permits you’ll need and don’t forget to include taxes and fees in your calculations.
The build costs will depend on a number of things, such as:
It’s always helpful to assume a project will cost more than expected. A 10-20% buffer in your budget will make sure you are ready if any emergencies or surprises appear, like hidden water damage or delays.
Remember: A budget that feels tight now will save you from financial stress later. Consider the maximum amount you’re willing to spend and work backwards to fit everything into that number.
When the renovation begins, it’s important to keep tracking costs against your budget and make sure you stay on track or are able to adjust if things take an unexpected turn. You might need to put off one part of the renovation or opt for less expensive alternatives to certain materials. Always pay contractors in stages as this will give you more control and ensure the work gets done right.
When you’re budgeting, think about the long-term impact of your renovation and focus on projects that improve your home’s functionality, energy efficiency or resale potential. If you can, include some basic energy-saving ideas in your renovation like:
Think of your renovation as an investment that doesn’t just help you today, but for all the years to come.
Source: NAB
Reproduced with permission of National Australia Bank (‘NAB’). This article was originally published at https://www.nab.com.au/personal/life-moments/home-property/renovate/costs
National Australia Bank Limited. ABN 12 004 044 937 AFSL and Australian Credit Licence 230686. The information contained in this article is intended to be of a general nature only. Any advice contained in this article has been prepared without taking into account your objectives, financial situation or needs. Before acting on any advice on this website, NAB recommends that you consider whether it is appropriate for your circumstances.
© 2024 National Australia Bank Limited (“NAB”). All rights reserved.
Important:
Any information provided by the author detailed above is separate and external to our business and our Licensee. Neither our business nor our Licensee takes any responsibility for any action or any service provided by the author. Any links have been provided with permission for information purposes only and will take you to external websites, which are not connected to our company in any way. Note: Our company does not endorse and is not responsible for the accuracy of the contents/information contained within the linked site(s) accessible from this page.
Stay up to date with what’s happened in the Australian economy and markets over the past month.
Interest rates and tariffs continue to influence markets globally.
After the RBA’s surprise move to leave rates on hold at its July meeting, soft inflation data has paved the way for a future rate cut.
The ASX 200 climbed to a fresh record high during the month of July. Wall Street also recorded all-time highs as tariffs begin to be locked in and AI investment takes off.
Click the video below to view our update.
Please get in touch if you’d like assistance with your personal financial situation.
