At the 2026 SMSF Association National Conference in Adelaide, ATO Deputy Commissioner Ben Kelly delivered a clear message: the regulator is sharpening its enforcement across a broad range of trustee behaviours not just paperwork. With the SMSF sector now managing over $1 trillion in retirement savings, the ATO is using data-matching, audit reviews, and direct trustee contact to identify and act on non-compliance. Here is what every SMSF trustee needs to know for 2026.
ATO’s top 10 focus areas
1.Outstanding and non-lodgement of annual returns
The ATO’s single biggest concern in 2026 is the lodgement crisis. As at 31 December 2025, more than 93,000 SMSFs had one or more outstanding SMSF Annual Returns (SARs) including 20,000 funds that have never lodged a return at all.
Deputy Commissioner Kelly was direct: funds set up solely to roll over super and then never lodge are the highest-risk cohort. Nearly 40% of these funds end up illegally accessing their super. “Lodgement is the cornerstone of compliance,” Kelly said. Trustees should treat on-time lodgement as non-negotiable not a courtesy.Critical priority
2.Illegal early access to superannuation
The ATO estimates $252 million was illegally accessed from SMSFs in 2022-23 the fourth consecutive year the regulator has tracked this figure. Any withdrawal before a condition of release is met is illegal, regardless of the structure used or financial pressure faced.
Common triggers include withdrawals framed as loans to related parties, or assets transferred to members before retirement age. Penalties include income tax at the top marginal rate, administrative penalties, and trustee disqualification.Critical priority
3.SMSF scams, fraud, and identity-based attacks
Fraudulent activity targeting SMSFs is now a top-tier ATO enforcement focus. Scammers are increasingly targeting SMSF members with fake investment schemes, identity theft, and unauthorised rollovers exploiting trustees who may not closely monitor their fund’s transactions.
The ATO expects trustees to maintain tight oversight of unusual transaction patterns, ensure identity verification is in place for all dealings, and promptly report suspected fraud. Auditors have also been placed on notice to flag unusual transaction activity in their reports.Emerging priority 2026
4.Asset valuations and Regulation 8.02B evidence
Accurate, well-documented asset valuations at market value as at 30 June each year remain a persistent focus. The ATO has specifically called out funds where asset values have remained unchanged across multiple years a pattern that suggests trustees are not engaging with genuine valuation processes.
For properties, unlisted shares, and business real property, supporting evidence must be objective and sufficient. The ATO reminds auditors that if evidence is inadequate, they must modify their independent auditor’s report and, where criteria are met, lodge an Auditor Contravention Report (ACR).High priority
5.Non-arm’s length income (NALI)
The ATO continues to scrutinise arrangements where an SMSF receives income or acquires assets on more favourable terms than a commercial dealing would produce. This includes undervalued services provided by related parties, non-commercial loan terms, and discounted rent on business real property.
Income tainted as NALI is taxed at the top marginal rate of 45% a potentially devastating outcome for funds that have inadvertently structured arrangements without arm’s length terms in place. Trustees should formally document all related-party dealings and obtain professional confirmation that terms are commercial.High priority
6.Division 296 tax – preparing for 1 July 2026
The Division 296 tax a 15% additional tax on earnings attributable to superannuation balances exceeding $3 million is legislated to commence from 1 July 2026. The ATO confirmed at the 2026 conference that further guidance will be issued, but trustees and advisers should already be modelling potential exposure.
Critically, the tax applies to unrealised gains, meaning large SMSF balances holding illiquid assets like property may face tax liabilities without a corresponding cash event. Defined benefit interests will also need careful treatment. This is one of the most significant structural changes to the superannuation system in years.New from 1 July 2026
7.Release and commutation authorities
Where the ATO issues a release authority (for excess contributions, Division 293 debt, or similar), trustees are required to act promptly and correctly. Failure to respond within the legislated timeframe, or to action the release in the correct form, results in direct ATO follow-up and potential penalties.
Similarly, commutation authorities arising from Transfer Balance Cap breaches must be actioned within strict time limits. Trustees should ensure their administrator is monitoring these obligations in real time, not retrospectively at year-end.Ongoing focus
8.In-house asset breaches (Section 84)
The in-house asset rules limit an SMSF’s investment in related-party assets to no more than 5% of the fund’s total assets. Breaches remain common particularly as funds grow, property values rise, or business real property arrangements change inadvertently pushing funds over the threshold.
The ATO is also seeing in-house asset breaches missed or misclassified during audits. Where a breach occurs, the trustee must prepare a written plan to reduce the in-house asset ratio to below 5% by 30 June of the following year. Ongoing focus
9.Trustee governance and engagement standards
The ATO’s compliance lens has broadened beyond technical rules to trustee behaviour. Deputy Commissioner Kelly emphasised that governance is “far more than ticking compliance boxes it’s the foundation of trust and confidence in the SMSF sector.”
The ATO is particularly focused on financial abuse and coercive control in SMSF decision-making, disengaged trustees who leave all decisions to a third party, and funds where the trust deed is outdated or investment strategies are never reviewed. Trustees have legal responsibilities they cannot fully delegate.Expanded focus 2026
10.Prohibited borrowings – Sections 67 and 67A
Limited Recourse Borrowing Arrangements (LRBAs) are the only permitted form of borrowing within an SMSF, and only under strict conditions. The ATO continues to identify breaches involving improper borrowings including fund-level borrowings, related-party loans without commercial terms, and LRBAs structured incorrectly from the outset.
With interest rate scrutiny on related-party LRBAs ongoing, trustees must ensure their borrowing arrangements are reviewed against the ATO’s safe harbour rates annually. An arrangement that was compliant at setup may no longer be if rates or terms have shifted.Ongoing focus
Division 296 takes effect from 1 July 2026. If your total superannuation balance exceeds $3 million, you should already be modelling how this additional 15% tax on earnings applies to your fund particularly if you hold illiquid assets like property or unlisted investments. Contact Agilis CA now to understand your position before the start date.
“Lodgement 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.”
Ben Kelly, ATO Deputy Commissioner of Superannuation & Employer Obligations, SMSF Association National Conference, February 2026
What Brisbane SMSF trustees should do now
Review lodgement status
Confirm all SARs are lodged and no returns are outstanding with the ATO.
Revalue all assets at 30 June
Ensure valuations are supported by objective, documented evidence especially for property and unlisted assets.
Review related-party dealings
Check that all loans, leases, and service arrangements with related parties are on genuinely commercial terms.
Model Division 296 exposure
If your TSB exceeds or approaches $3 million, run projections now before 1 July 2026.
Confirm in-house asset ratio
Calculate your fund’s in-house asset exposure as a percentage of total assets and check against the 5% limit.
Secure your fund against fraud
Review transaction authorities, ensure member details are up to date with the ATO, and monitor for unusual activity.
The ATO’s 2026 priorities reflect a maturing enforcement posture one that looks beyond whether the boxes are ticked to whether trustees actually understand and engage with their obligations. The good news is that for trustees who are well-advised and proactively managed
