Self-managed super funds now control more than $1 trillion in retirement savings and attract thousands of new trustees every quarter as more Australians move away from large retail and industry funds and choose to run their own super. These funds sit under the supervision of the national tax regulator rather than the prudential regulator, and unlike big super funds they mostly reveal what they are doing through a single annual return, which makes timely lodgement critical for monitoring risks.
The regulator is currently focusing on about 93,000 self-managed funds, roughly 1 in 7 that have fallen behind or failed to file returns altogether, including around 20,000 that have never lodged a return. Officials link this non‑lodgement to a sharp rise in illegal activity, with about $650 million withdrawn or lent out improperly in the year to 30 June 2023, up $117 million on the prior year, and say most of that jump, about $115 million, comes from prohibited loans arranged through these funds.
This push sits within a broader shift away from pandemic-era leniency and towards more assertive enforcement across wealth structures such as family trusts, as the regulator looks to protect retirement savings while the self-managed sector continues to expand. Much of the illegal early access appears concentrated in newly created funds with low balances, often below $200,000 and many of these funds seem to have been set up from the outset as vehicles to tap super early, sometimes promoted to people in financial distress and charged high fees for the privilege.
At the same time, the regulator is preparing for new rules that will shape how wealthy members use self-managed funds, including pay-day super requirements, where super must be paid at the same time as wages, and the proposed Division 296 tax that would lift tax rates on earnings from super balances above $3 million and again above $10 million. The new rules could change how high-balance members structure their savings, but the exact impact on investment strategies, fund creation and trustee behaviour will only become clear once the legislation is finalised and detailed guidance is released.
