At the SMSF Association National Conference in Adelaide in February 2026, the ATO’s Deputy Commissioner Ben Kelly outlined where the regulator will be focusing its attention this year. The message was direct: lodgement compliance, prohibited loans, and data matching are front and centre.
For trustees running well-managed funds, the content was reassuring. For those with outstanding obligations or loose governance habits, it was a clear warning.
Here is what was announced and what it could mean for your fund.
Overdue annual returns are the number one priority
As at 31 December 2025, approximately 93,000 SMSFs have one or more outstanding lodgement obligations. Of those, 20,000 have never lodged a single return since registering their fund.
The ATO views lodgement as the foundation of everything else. It is how the regulator assesses whether a fund is operating within the rules and how trustees demonstrate they are meeting their legal responsibilities.
When a fund falls behind on lodgement, several consequences follow. The fund’s status on Super Fund Lookup can be changed to “regulation details removed”. This prevents the fund from receiving rollovers and employer contributions. Penalty notices and administrative sanctions will then follow.
For trustees who are up to date with their lodgements, this is not a concern. But if your fund’s most recent lodged return is for 2022-23 or earlier, this should be the first call you make to your accountant.
Prohibited loans have surged
The ATO’s data showed that prohibited loans within SMSFs reached an estimated $398 million in 2022-23. That is up from $231 million the year before.
A prohibited loan occurs when an SMSF lends money to a member or a related party, or when fund assets are used to benefit a member before a condition of release has been met. The most common scenario is a trustee using fund money to support a business they own or to cover personal cash flow shortfalls with the intention of paying it back later.
The ATO makes the position clear. There is no “putting it back later” that fixes the problem. The breach occurs at the point the money leaves the fund in a way that is not permitted. The consequences include additional tax, penalties, and in serious cases, disqualification as a trustee. That disqualification goes on the public record.
Data matching is expanding
The ATO continues to expand its real-time data matching capabilities across the SMSF sector. This includes cross-referencing fund transaction data with information from banks, share registries, land title offices, and the ATO’s broader tax systems.
What this means practically is that irregularities that might have gone unnoticed in an era of manual compliance checking are now increasingly visible. Asset valuations that appear inconsistent with comparable sales, related-party transactions that do not look arm’s length, and contribution timing that does not match bank records are all areas where data matching creates exposure.
For trustees holding property in particular, the ATO expects objective, supportable evidence of market value at 30 June each year. This means not estimates, not last year’s figures carried forward, and not valuations that conveniently coincide with a preferred outcome.
What the ATO wants every SMSF trustee to focus on before 30 June 2026
Based on what was presented at the conference, the ATO's Deputy Commissioner outlined three areas where trustees should be directing their attention:
Lodgement. The ATO was explicit: trustees who are behind on returns should act before the regulator does. Kelly noted that the approach taken with trustees who come forward proactively is materially different to the approach taken with those the ATO identifies through its own compliance activity.
Related party transactions. Any movement of money between an SMSF and a member, spouse, business, or associated entity that was not a permitted benefit payment is an area the ATO is actively examining. Kelly encouraged trustees to review these arrangements and seek advice where there is any uncertainty.
Asset valuations. With Division 296 adding a new layer of scrutiny to high-balance funds, Kelly emphasised that the ATO expects objective, supportable evidence of current market value for all non-listed assets - particularly property.
What this means for compliant trustees
The Deputy Commissioner’s remarks were not designed to alarm trustees who are running their funds correctly. The ATO is clear that the majority of SMSFs are compliant. The enforcement focus is targeted at a specific group of funds displaying particular patterns of behaviour.
But the underlying message is worth taking seriously, regardless of where you sit. Governance is not just about ticking compliance boxes once a year. It is an ongoing responsibility that sits with the trustees.
The ATO’s position in 2026 is that compliant trustees should have nothing to fear. Non-compliant trustees should expect to be found.
This article is for educational purposes only and does not constitute financial advice. Always consult a licensed financial adviser or SMSF specialist before making decisions about your fund.