It stated the requisite thresholds have been in place since 2001, have not been reviewed, updated or subject to indexation, and are now “significantly outdated”.

Additionally, despite issues being raised as part of the Future of Financial Advice (FOFA) reforms in 2011, there have been no significant changes.

“In the context of SMSFs, a number of issues are in need of urgent remediation. Whilst the acquisition of a superannuation product will always be considered a retail client product or advice, the placement of investments and insurance products within the fund can be made as either a retail or wholesale client,” it stated in the submission.

“However, the operation of the assets and income test for an SMSF are unclear. In the 2011 review, issues were raised on the application of the assets test for SMSFs, as no specific provisions were made.

“The question is whether the $10 million professional investor test for superannuation funds applied to SMSFs, rather than the $2.5 million asset test.”

The submission continued that legislative ambiguity means no formal guidance has been issued by ASIC on the operation of the law in the context of SMSFs.

In 2014, ASIC issued a media statement stating that where the $2.5 million asset test is applied for an SMSF, no regulatory action would be taken.

However, it also warned this “will not affect any private rights of action that may be available to third parties” and that “persons providing financial services to trustees of SMSFs need to make their own commercial decisions after considering the legal risks”.

Prior to this, the SMSFA said ASIC held the view that the $10 million asset test would apply in an SMSF context.

“This gap in the legislative framework poses a significant risk to advisers, accountants, and their clients,” the submission stated.

The SMSFA has asked the government and Treasury to examine these issues and provide legislative certainty as well as greater clarity on how the asset and income tests are to apply to an SMSF.

“While many funds will have a special-purpose corporate trustee, some SMSFs still have two or more individual trustees and the application of the test differs, depending upon the SMSF trustee structure,” it stated.

“The question remains whether it is appropriate to apply the tests at the trustee level or whether the tests should be based on the individual member’s interest in the fund.

“Further, the control test pursuant to section 50AA of the Corporations Act 2001, operates counter to the trustee fiduciary duties, legislated trustee covenants and obligations, that apply to all trustees or directors of the corporate trustee of the fund.”

Additionally, the SMSFA has also urged the government to end accountants’ certificates over concerns that product issuers and advisers are increasingly reliant on them.

It stated as part of the same submission that accountants’ certificates are no longer fit for purpose and must now be removed.

“The regulation of the financial services sector has significantly changed since 2001. An unlicensed accountant is unable to advise a client to acquire or dispose of a financial product. This includes advice not to do so.

“Pursuant to the Accounting Professional Ethical Standards Board APES 110 Code of Ethics for Professional Accountants, accountants have both professional and ethical obligations to their clients.

“Where an accountant is not licensed to provide financial advice, these duties, and obligations conflict.”

The SMSFA stated it had observed an emerging trend in the certificates being requested requiring the accountant to attest to information beyond the statement of fact required, placing accountants at significant, personal risk.

“This was not the original policy intent of these provisions. This is an area of growing concern for our members, and we are receiving an increasing number of queries on the application of the regime to SMSFs,” it stated.

The association has also heard of circumstances where accountants have been approached, unsolicited, by non-clients, who have been referred to the accountant, seeking the completion of an accountant’s certificate.

“Issues also arise around the loss of capacity and requests for certificates for individuals subject to enduring power of attorneys,” it stated.