The sequence ASIC found
In November 2025 ASIC published Report 824, a review of personal advice given to people about setting up an SMSF. One of its examples shows how a property sale and an SMSF can be stitched together. Two advisers working inside an accounting business had four client files in the sample, and every one involved setting up an SMSF to buy an off-the-plan residential property. ASIC set out the order of events.
AskWhich came first here: the advice about my super, or the property?
A referral
In all four files, a real estate business had referred the clients to the advisers.
General advice first
The advisers recorded that they began with general advice about setting up an SMSF to buy an investment property.
A property chosen
The clients then agreed to buy a specific property, and only after that went back to the advisers for personal advice.
The recommendation
The advisers recommended an SMSF so the clients’ retirement savings could fund the purchase.
ASIC’s finding for all four: the risks of using an SMSF for the off-the-plan property were excessive for the client, the advice was inappropriate, and the adviser had put their own interest ahead of the client’s.
What the wider review found
ASIC chose 100 advice files using risk indicators, and says the sample was not meant to be random or representative of the advice sector.
files of 100 in which the adviser did not show compliance with the best interests duty and related obligations.
of those 62 in which ASIC had significant concerns about harm to the client; they came from a small subset of advisers.
Among the key issues ASIC lists is not giving priority to clients where there were conflicts of interest, including advice to set up an SMSF to buy off-the-plan properties with a limited recourse borrowing arrangement: a loan the ATO says can fund the purchase of a single asset, which is held in a separate trust outside the fund.
The report’s table of risk indicators names advice that brings clients into SMSFs through referral arrangements with real estate businesses, and lists direct property (including with that kind of loan) among the less diversified or higher-risk assets it used to choose its sample. ASIC’s summary is blunt: “There is a significant amount of money in our superannuation system that bad actors are trying to exploit, on an industrial scale.”
AskDid a real estate business send me to this adviser?
The sales tactics Moneysmart names
Moneysmart says property developers need an Australian financial services (AFS) licence if they give financial advice, and that includes advice about setting up an SMSF. Developers may have business ties with the professionals they recommend, and may receive referral fees or other benefits that Moneysmart says could run to thousands of dollars.
It tells readers to be cautious if they feel pushed to buy property through an SMSF, and to watch for competitions, free flights to sales meetings and free meals. It also warns that when advisers recommend one another, commissions or referral fees may be paid to people in the deal, such as developers or real estate agents.
AskWho is paid if I say yes, and how much?
Moneysmart’s list of risks in a geared SMSF property
Moneysmart lists six risks when an SMSF borrows to buy property. In its order, in brief:
- Higher costs. Loans for SMSF property often carry higher rates and fees, running the fund can cost more, and a holding trust may be needed.
- Cash flow pressure. The fund has to meet repayments and property costs, perhaps while also paying pensions or other withdrawals, and may have to sell to pay a large withdrawal such as a death benefit.
- Loan repayment risk. There needs to be a plan for repaying if the property is empty, or if contributions stop through job loss, illness, injury or death.
- Hard to cancel. If the loan or property papers are set up wrongly, they may not be fixable, and selling may be the only way out, possibly at a heavy loss.
- Tax limits. Tax losses cannot be set against income outside the fund.
- No major alterations. The character of the property cannot change until the loan is repaid.
What the ATO watches for
The ATO gives an example of breaching the sole purpose test: an SMSF that buys a rental property specifically so that a related party can live in it.
If a fund breaks the investment restrictions, the ATO says it “may take a range of actions, including” imposing penalties, making the fund non-complying, disqualifying the trustee or prosecuting trustees.
It also warns about people promoting schemes to release super early, for example to pay off a debt or buy a house, and says these schemes are illegal. Taking super before you are entitled to it can bring significant penalties as well as income tax on the amount.
AskWho will live in this property, and who will rent it?
Protections an SMSF gives up
ASIC’s Information Sheet 274 tells advisers to make sure clients understand that an SMSF does not have the same protections as a fund regulated by APRA. After theft or fraud, an SMSF “is not eligible for government compensation under Part 23 of the SIS Act”, though its trustees may be able to seek compensation through AFCA from a financial firm that advised or served them.
Complaints against an SMSF itself cannot go to AFCA, and AFCA cannot resolve disputes between an SMSF’s own trustees. As trustee, you remain personally responsible for the fund’s compliance even when professionals help run it.
For the rules themselves, Moneysmart’s SMSFs and property page and the ATO’s page on SMSF investment restrictions are the places to start.
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