The median ‘operating expense’ for a self-managed super fund (SMSF) is $3,923 a year, according to the Australian Office of Taxation (ATO), far lower than the $13,900 quoted in a recent SMSF factsheet.
The $13,900 figure was highlighted as a total average expense figure on a recent SMSF factsheet.
The figures were distorted by the inclusion of large super funds and funds which choose to use borrowing and have extensive insurance, administrative and investment services.
SMSF Association chief executive, John Maroney, said the new figure in the ATO 2017/18 Statistical Overview of SMSFs was “far more realistic” of what it cost to operate an SMSF.
“We welcome this latest data from the ATO on operating expenses as it reflects a far more realistic assessment of what it costs to operate an SMSF,” he said.
“We have been encouraging the ATO to publish more granular expense data and are extremely supportive of the updated data that has now been released.”
His comments were supported by Tim Wilson MP who described the high fee figure as “sheer fantasy” and demanded that the Australian Securities and Investments Commission (ASIC) retract the factsheet.
The new ATO tables break down median and average expenses by type and fund size as well as streamlining operating expenses to include factors like auditor fees and administration expenses.
“What these revised tables clearly show is how SMSFs exceeding $2 million had a significant impact on the weighting of the costs allocated to an average figure. In addition, the impact of expenses such as investment expenses, insurance and interest on investment borrowings were attributed to the average when many SMSFs choose not to use these services,” Maroney said.
“The data allows us to take a fund with a typical establishment balance of between $200,000 to $500,000 and, if we only include the basic operating expenses, we can estimate the median operating expense to be around $3,400 for these SMSFs.”