Industry funds question increased levy funding to ATO

Mike Taylor

Managing Editor and Publisher

22 June 2026

The industry superannuation funds lobby has directly challenged the growing amount of money from the so-called “APRA levy” to fund the Australian Taxation Office (ATO) and, in particular, the ATO’s oversight of the compassionate superannuation release regime.

In a submission to treasury responding to the proposed rise in the financial institutions supervisory levies for 2026-27, the Super Members Council (SMC) has questioned the justification for a 11.3% rise to $112.5 million and urged the Treasury to provide greater transparency around how and where the money is being spent.

However, its concerns around the ATO component have proved very revealing with the SMC suggesting the compassionate release framework is being misused and citing instances not dissimilar to those identified around investments in the now-collapsed Shield and First Guardian funds.

The SMC said it had “previously highlighted growing harm and misuse risks to consumers in the compassionate release framework, including aggressive marketing by third parties, questionable practitioner certification practices, and the long-term retirement harm caused by unnecessary early withdrawals”.

“Against that backdrop, if members are being asked to fund a substantial ATO levy component for compassionate release administration, Treasury should explain what additional preventive, intelligence, compliance and enforcement activity this funding will support, and how success will be measured,” it said.

“Without that detail, it is difficult to assess whether the proposed levy settings will materially reduce member harm or simply fund ongoing administration of a system with known weaknesses.”

The SMC also pointed to the increasing amount of money being spent on platform-based superannuation and suggested that those businesses should be made to fund the increased regulatory effort.

“APRA’s heightened focus on platform governance, investment option oversight, expenditure discipline and retirement indicates increasing supervisory intensity in particular parts of the super sector,” it said. “Where regulatory effort is concentrated on higher-risk business models or practices, the levy framework should better reflect that risk concentration.”

“Treasury should examine whether a more targeted approach is appropriate that aligns with the required supervisory intensity for each sector and member fairness.”

“These concerns should also be viewed in the context of cumulative cost pressures already being borne by members including other system costs such as the CSLR special levy last year,” the SMC said.

“While each measure may be justified on its own terms, the combined effect is to place additional pressure on Australians’ compulsory retirement savings, without a correspondingly clear account of the value being delivered. This reinforces the need for Treasury to adopt a transparent, rigorous and consultative approach to levy-setting with demonstrated benefit across all components.”

“SMC supports strong and effective regulation, while being clear that members should only be asked to fund rising levy costs with a clear and compelling case for why those costs are necessary, proportionate and delivering measurable value. Treasury should ensure the levy framework is disciplined, transparent and firmly anchored in consumer and members’ best financial interests.”