Ben Kelly, Deputy Commissioner, Superannuation and Employer Obligations
Address at the SMSF Association National Conference
Adelaide, 18 February 2026
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Good afternoon, everyone.
I wish to commence today by respectfully acknowledging the Kaurna people as the Traditional Owners and Custodians of the land on which we meet today, and their continuing connection to land, waters and community. I pay my respects to them, their culture, and their Elders past and present.
Thank you for having me along today and I’m especially pleased to be co-presenting with Leah from the Australian Securities & Investments Commission (ASIC), with whom we share a joint regulatory role in the SMSF sector. Together we seek to ensure SMSFs remain a dependable and thriving part of Australia’s retirement system.
Today, I would like to share with you some of the things we are currently focussing on from a compliance perspective, as well as making some observations about changes in the ecosystem that the SMSF sector will be navigating over the coming period.
But before I do that, I thought I would spend a couple of minutes reflecting on the level of assets held in SMSFs now exceeding $1 trillion as at the end of the last financial year. This is nearly a quarter of the assets held in Australia’s superannuation system.
These amounts can justifiably instil confidence that the broader system continues to grow to meet the objective of superannuation – that is, to preserve savings for a dignified retirement, alongside government support, in an equitable and sustainable way.
But I think it is equally important to reinforce that the system is a vital national asset. It provides a deep pool of resources for investment and is critical in offering a ballast for the demands an aging population will place on the country in the future.
What does this mean for the SMSF sector? For my part, I believe this only serves to emphasise the essential role of strong governance in protecting individuals’ retirement savings. This responsibility cannot be overstated.
From the ATO’s perspective, governance is far more than ticking compliance boxes. It’s the foundation of trust and confidence in the SMSF sector.
Strong governance means every decision is made with care, transparency, and a clear focus on members’ best interests. It’s about creating a system where trustees feel supported, advisers uphold integrity, and members can rely on the security of their retirement savings. As the sector grows and evolves, governance remains the cornerstone of credibility and, together, we must lead the way in setting and maintaining that standard.
As the regulator of SMSFs, the ATO continues to see behaviours that fall well short of this standard. Shifting this behaviour requires a collaborative effort – it cannot rely solely on the actions and influence of the Regulator. In this regard, I particularly acknowledge the importance of SMSF professionals who support individuals to manage their own retirement savings and the key role they play in ensuring we maintain good compliance in the sector.
So, with that said, what are we currently focussing on from a compliance perspective?
Our key areas of compliance focus
Illegal early access and prohibited loans
I will start with an update on our estimates of illegal early access and prohibited loans.
For the 2022–23 financial year, we estimated that $252 million was accessed early from SMSFs without a condition of release being met. That’s slightly up from $250 million the previous year. While the increase is modest, the figure itself is significant and with this being our fourth consecutive year where we have undertaken a program to estimate the illegal early access risk, it tells us this issue isn’t going away.
Of greater concern is that the level of prohibited loans has surged. In the 2022–23 financial year, our prohibited loan estimate jumped to $398 million from the 2021–22 published figure of just over $231 million. Some part of this increase – around $50 million – is attributable to us for the first time making an estimate of the level of prohibited loans in SMSFs that have not lodged a return. Nevertheless, even after this one-off impact has been taken into account, this represents an increase of around $115 million in one year. While many of these loans are eventually repaid, the reality is SMSF members should not be accessing their funds in this way.
So, why do we think this is happening?
Our analysis indicates that most cases of illegal early access and prohibited loans involve newly established funds that never intended to operate as genuine superannuation funds. Instead, they were set up as conduits for short-term finance, often facilitated by promoters who target vulnerable individuals and charge exorbitant fees.
We also know that SMSFs with balances below $200,000 are the most likely to engage in illegal early access, with just over 80% of all cases coming from this group.
Finally, and more generally, intelligence from our compliance work points to there being 3 main drivers for illegal early access and prohibited loans: financial stress; lack of knowledge, and personal issues, such as relationship breakdowns.
We have seen some commentary recently which may be read as suggesting that breaches of this nature may be rectified by simply repaying the money accessed or loaned back into the fund. While we agree repaying the money into the fund is important in these circumstances, I want to make it very clear that a breach has occurred once the money has left the fund if a condition of release has not been met or the use of the funds is not otherwise permitted by the SIS Act. My underlying message to trustees is to not access or loan the funds in the first place – it is the only way to avoid a breach.
We will continue to take a firm stance on these behaviours. What we commonly hear from trustees who have engaged in illegal early access or prohibited loans is the mindset that ‘super is my money’. Of course, at a basic level, this is true. However, to return to my initial observations, it is money that is placed in trust for the purpose of preserving savings for retirement. Unless otherwise accommodated by the law, the assets need to remain in the fund for that purpose. These are not grey areas. They are clear breaches of the law.
To help address these issues, we’ve released several education products in recent years, including the SMSF lifecycle publications, trustee education courses, and a fact sheet (PDF, 160KB)This link will download a file on illegal early access. With your support, it is critical that trustees, particularly new ones, are made aware of and understand the rules and consequences. I encourage you to visit our booth in the main hall and get your hands on these resources to share with your clients, particularly given the increasing numbers of trustees who are just entering the system.
Timely lodgment of SMSF annual returns
One of our other compliance priorities is addressing overdue SMSF annual returns. As at 31 December 2025, approximately 93,000 funds have one or more outstanding lodgment obligations. This population includes 20,000 that have never lodged a SAR since they registered their SMSF.
Lodgment is the cornerstone of compliance. It is how trustees can best demonstrate they are meeting their legal responsibilities. It is also how the integrity of the sector is monitored. And, finally, it is how we protect the retirement savings of Australians who rely on the system to operate with transparency, discipline, and accountability.
SMSF advisors play a pivotal role in supporting SMSF trustees to meet their annual lodgment obligations. A smooth lodgment process supports compliance and helps maintain the integrity of the fund and the SMSF sector more broadly. By engaging early, communicating clearly, and fostering organised, well supported clients, advisors can ensure the provision of timely and transparent information by funds.
In our experience, timely lodgment is generally a marker of a fund operating within tax and regulatory guardrails. The highest-risk group from our compliance perspective remain SMSFs that are set up, roll over their super, and then never lodge a return – a group we refer to as the ‘never lodgers’. Almost 40% of these funds end up illegally accessing their super, and the value of illegal early access in this group rose by nearly 40% last year.
We are nevertheless aware that there are some issues that can impact lodgments of returns for SMSFs who are trying to do the right thing. There are a few simple and practical steps that can make a significant difference to avoid late lodgments.
Firstly, engage SMSF auditors early so that there is ample time to complete audits thoroughly and identify issues before they become pressing. This reduces the risk of last-minute delays and helps maintain a consistent workflow across busy periods.
It is also important to request complete documentation such as bank statements and valuations upfront from trustees to ensure a mutual understanding of exactly what’s needed. Educating trustees about year-round documentation rather than last minute collation supports smoother audits and fewer follow up questions. This is especially valuable for funds with more complex investments or related‑party dealings.
And lastly, maintain strong communication channels, by which I mean having regular touchpoints throughout the year, rather than only at the end of the financial year.
Frauds and scams
The impact of fraudsters and scammers on the sector is also a compliance focus for us, but in the interests of time, I might elaborate on that some more in the Q&A session with Leah and Mary.
Financial abuse and coercive control
Before discussing the topic of broader change in the system, I would like to quickly touch on the issue of financial abuse and coercive control being perpetrated through the tax and superannuation systems. In doing so, I’d like to start by commending the SMSFA for its engagement and preparedness to advocate on this very important issue.
There are a range of initiatives the ATO has put in place to help address these issues, which is worthwhile letting you know about.
Specifically, in an SMSF context, in November last year we initiated a practice to contact all individuals and directors of a corporate trustee for newly established SMSFs that we assess as ‘high-risk’. In an environment where we are seeing a greater incidence of coercive control, this ensures each party is aware of the SMSF’s registration and allows us to provide education on potential contraventions. If we discover during the registration process a trustee is unaware of the fund, we can wind up the SMSF, a process that is easier at this point as opposed to when assets are held or illegal early release has occurred.
Where illegal early release has occurred, we cannot change tax outcomes, but we can still offer information and support.
More broadly, the ATO has recently introduced a new Vulnerability Framework, a principle-based guide that demonstrates our commitment to supporting people who may experience vulnerability when engaging with the tax and superannuation systems. Vulnerability can be temporary or long-term and may affect a person’s ability to meet obligations or access entitlements. It can also arise because of financial abuse or coercion. We have a shared responsibility to work together so vulnerable clients feel supported, heard and protected.
We have updated our contact centre scripting so that any calls suggesting coercion or similar concerns are escalated promptly to the designated area within the ATO.
While the Framework does not change legal obligations such as tax debts, it does provide guidance on how we listen, communicate, and connect people to appropriate support. We are committed to transparency, consultation, and practical actions that help us recognise vulnerability, respond with empathy, and tailor support.
I encourage you to visit the ATO website to learn more about the Framework and share this information with trustees who may be experiencing vulnerability.
Upcoming changes in the superannuation ecosystem
The SMSF sector is evolving faster than ever before, and, as I know this audience is quite aware, we are entering a period of significant change.
Division 296
I know many of you are very keenly interested in the Division 296 measure. As has already been noted, the Bill for this measure was introduced to the Parliament last week, so it is not appropriate for me to say anything here about the operation of the proposed law.
I can, however, let you know 2 things about our preparations to implement the measure:
- First, the ATO has a well-proven capability to implement the legislative agenda of the Government of the day. My team working on the Division 296 measure has established a working group of stakeholders, in which the SMSFA has been actively engaged. We will continue to leverage the expertise of this working group once the Bill has passed the Parliament and we have law to implement.
- Secondly, I appreciate there will be questions about how the ATO will interpret and administer the law following passage. We will be consulting very soon on what are the highest priorities for clarification through advice and guidance. In making my own contribution to this process, I will let you know the 2 most important factors in my mind are: first, what issues are the most time sensitive; and, secondly, what issues have the broadest impact on taxpayers and stakeholders. So, I’d particularly value your feedback directed to these ends as part of the consultation process.
Payday Super
One change I can say a lot more about, because it is law, is Payday Super.
Under Payday Super the timing of Super Guarantee contributions changes from quarterly payments to payday from 1 July 2026, meaning employers will need to pay super at the same time they pay salary and wages. These contributions need to be received by the super fund within 7 business days, although there are some exceptions. For example, more time, up to 20 business days, is allowed for new employees or where an employee changes their super fund.
If contributions aren’t received by the employee’s super fund within these timeframes, then employers will be liable for the Superannuation Guarantee Charge.
To make Payday Super a success for SMSF members, it is important for trustees to start preparing now for the upcoming changes, keeping the following 3 things front of mind.
First, in an environment where compliance is critical, and contributions must be received in a timelier way, trustees need to ensure they continue to meet all their regulatory and lodgment obligations to ensure their fund remains complying.
Secondly, to help employers meet the Payday Super timeframes, there have been some updates to SuperStream. This includes better error messaging, the ability to receive contributions faster through the New Payments Platform, and new services such as the Member Verification Service. SMSFs that receive employer contributions from unrelated employers need to make these changes to continue to meet Super Stream requirements for electronic processing.
It is important that trustees speak to their bank to be ready to accept fast payments through the New Payments Platform (OSKO), and that they have an active electronic service address. After 1 July 2026, if the SMSF is receiving contributions through SuperStream and trustees do not have an active electronic service address, employers will receive an error, which will stop them from making further contributions to the fund.
Finally, one of the aims of Payday Super is to allow the ATO to take timely and proactive action where employers are not meeting their SG obligations. This will be more challenging for contributions owing to an SMSF member, as we do not receive real time reporting of contributions made to SMSFs. Instead, we only receive a report of contributions as part of an SMSF’s annual return – another reason why timely lodgment of these returns is very important. As is the case now, SMSF members will need to continue to monitor receipt of contributions and contact the ATO if they are concerned their employer is not meeting their SG obligations.
Conclusion
To wrap up, managing one’s own super is a privilege and with that privilege comes responsibilities. As the Regulator, our commitment is clear – to support trustees in meeting their obligations, to act decisively when risks arise, and to ensure fairness across the sector. Compliance is not optional but rather it is the foundation that protects trustees, members, and the overall integrity of the system.
I urge every trustee and adviser to stay informed, adopt best practices, and make full use of the resources available. Together, we can uphold confidence in SMSFs and secure the retirement savings of thousands of Australians for generations to come.
Thank you, I will now hand back to Mary.