Number of SMSF wind-ups rises rapidly, ATO data shows
The number of people winding up their SMSFs has increased rapidly, while the number of establishments has dropped to its lowest level since 2014.
The latest data from the Australian Taxation Office (ATO) revealed that since 2014 the number of SMSF wind-ups has hovered around 13,000, before rocketing to 20,430 in June 2018.
At the same time, establishments have dropped from 33,358 in 2014, to 30,517 in 2017, and further to 25,457 in June last year.
Despite the fluctuating statistics, the total number of SMSFs remained relatively flat and stood at 584,802 in June 2018.
The ATO explained that the rapid rise in SMSF wind-ups in the 2017-18 financial year is due to its cancellation of ABNs for around 9,000 SMSFs.
Incentives for further fund wind-ups
If elected, the Labor Party has insisted that it will scrap the ability for superannuation funds to claim their full entitlement to franking credits. This is predicted to push additional SMSF owners to wind-up their funds.
The House of Representatives standing committee on economics recently made recommendations against Labor’s policy, calling it “inequitable and deeply flawed”.
The chair of the committee, Tim Wilson, said that although some have argued that the intention to scrap refundable franking credits is designed to tax the wealthy, “this is an unfair characterisation of the 900,000 Australians who will be affected”.
The Treasurer asked the committee to inquire into the implications of removing refundable franking credits in September 2018, a few months after Labor made the announcement that it intends to implement this policy if elected.
In October, the Institute of Public Accountants said in a government submission that it does not support “piecemeal changes” to the current imputation system without the consideration of more holistic reform options.
The IPA also presented the results of a poll it conducted among its members, which revealed that 95.32 per cent do not support a change in policy to deny refunding of excess franking credit refunds.