Lies, damned lies, and SMSF statistics
If you based your industry views on the breathless reporting of the ATO’s latest SMSF statistical report (for March 2013), you would think the SMSF segment was about to cave in.
This quarterly data release was widely reported by the Australian Financial Review and others as reporting that the rate of establishment of SMSFs had halved, a decline which was attributed to policy tinkering by the ALP Government.
As tempting as it is to have yet another swing at short-sighted super policy, there’s a significant problem with financial media reporting data points such that “the net number of SMSFs grew by 5,778 in the March quarter, one of the lowest levels for the past five years, the latest Australian Taxation Office statistics reveal”*.
That problem is that it’s simply not true. Well it might be, but it’s probably not. It certainly didn’t ring true with service SMSF providers at the coalface. In fact, no-one knows for sure, including the ATO. And that’s because the numbers the quarterly reports are based on are just estimates, based on data which is most likely nearly 2 years old.
To be fair to the ATO, it does note that the quarterly figures are statistical estimates, but it could do more to highlight this, the limitations of the data, and that it should be used with great care – if at all. Mind you, the same could be said of the conclusions of SMSF research from the private sector based on relatively small samples.
Frankly we don’t know why the ATO bothers with publishing quarterly data, given its outputs could be criticised as being anywhere between heroic and misleading. Gospel it is not. The facts are that there is only one really useful and representative source of truth when it comes to SMSF data, and that is SMSF annual tax returns.
Those tax returns still leave much to be desired in terms of capturing a broad swathe of SMSF data, particularly when it comes to behaviors such as asset exposures, so it’s an incomplete view at the best of times. But the ATO is pretty keen on collecting tax, so data regarding size and flows tends to be better quality.
In general SMSF tax returns for each June 30 tax year are due the following May, which means that the 2012 returns are pretty much due to have been lodged by now. We would normally get a recut of the ATO SMSF June 2012 data, populated with real data, in August 2013.
So the idea that that ATO is publishing accurate March 2013 SMSF data is simply preposterous. It’s probably still based on June 2011 data at the moment.
The Australian financial media has a track record of credulity and a lack of inquiry when it comes to data releases – see our first Trialogue for 2013 for another example: http://www.triapartners.com/triapartners-blogs.php?article=content/Blog-Super%20contributions%20boom?&type=NzE=.
But never fear, Tria is here. As soon as the SMSF actuals for June 2012 become available around August, we’ll bring you up to date with the real numbers. Until then, treat ATO quarterly SMSF data with the wariness that it deserves.
* Australian Financial Review, 27 May 13