SMSF investors
Can an SMSF be a wholesale investor? ($10m, $500k and what AFCA said)
Many SMSF trustees assume that if they qualify as wholesale investors personally, so does their fund. AFCA has taken a different view. Here is how the tests apply to super funds, and where the law is still being argued.
An SMSF can be a wholesale investor, but the bar is higher than for individuals. Where a financial service relates to a superannuation product, the law treats a super fund as retail unless it has net assets of at least $10 million. AFCA took that approach in 2024, so a trustee’s personal certificate may not be enough.
This matters to anyone who invests through their SMSF in offers that are open only to wholesale investors, including co-funding secured loans with HomeSec Business Finance, an Australian private lender founded in 2004. It is one of the more unsettled areas of Australian financial services law, so this guide sets out what is clear, what AFCA has said, and what is still being argued.
Why is the SMSF test different from the individual test?
For individuals, the main wholesale tests are simple: invest $500,000 or more in the offer, or hold a qualified accountant’s certificate showing net assets of at least $2.5 million or gross income of at least $250,000 in each of the last two financial years. We explain them in wholesale vs sophisticated vs retail investors. That $500,000 figure is a legal eligibility test, not the amount you have to put into each loan; once you qualify, you choose how much to contribute to each loan, from $100,000 to several million dollars.
Super is treated separately. Section 761G(6) of the Corporations Act deals with financial products and services that relate to superannuation products. As SMSF Adviser explains, under s761G(6)(c) a service to the trustee of a super fund with net assets of $10 million or more, relating to a superannuation product, is not provided to a retail client. Below $10 million, it is.
The general tests in s761G(7), including the $500,000 and certificate tests, do not apply where the service relates to a superannuation product, according to AFCA.
How do the tests apply to super funds?
| Test | For individuals, companies and trusts | For SMSFs, on AFCA’s approach |
|---|---|---|
| Fund net assets of $10 million (s761G(6)(c)) | Not relevant | The key test where the service relates to a superannuation product; the fund’s own assets count, not the trustee’s |
| Product value of $500,000 (s761G(7)(a)) | Available | Not available where the service relates to a superannuation product; contested for other products |
| Accountant’s certificate, $2.5m or $250,000 (s761G(7)(c)) | Available, including for controlled companies and trusts | A trustee’s personal certificate did not make the fund wholesale in AFCA’s 2024 decision |
| Professional investor | Available, e.g. controlling $10 million or more | Includes a super fund trustee where the fund has net assets of at least $10 million |
| Experienced investor (s761GA) | Available through a licensee’s assessment | Listed as a possible pathway, with documented assessment |
The last row comes from SuperConcepts’ August 2026 guide, which sets out all three pathways for SMSFs.
What did AFCA decide in 2024?
In June 2024, AFCA considered a complaint about an adviser who had treated an SMSF trustee as a wholesale client. The trustee held a qualified accountant’s certificate showing $2.5 million in personal net assets. AFCA found the classification was wrong, because the SMSF itself held less than $10 million.
AFCA’s lead ombudsman, Shail Singh, put it plainly: “Even if trustees have extensive investment experience, the SMSF is still regarded as a retail investor if the fund’s asset base is below $10 million.” The trustee’s experience did not change the classification, though it did reduce the compensation awarded.
SMS Magazine reported in June 2025 that AFCA was holding that position, and that “external income or assets do not affect this classification”. In September 2026, it described the effect: since the 2024 decision, SMSF trustees are treated as retail by default and need $10 million in fund assets to be wholesale, whereas many had previously relied on the $2.5 million or $500,000 routes.
Has AFCA applied it since?
Yes. SuperConcepts reports a May 2026 AFCA case in which an SMSF was incorrectly classified as wholesale when investing in wholesale-only funds. AFCA ordered the financial firm to pay the SMSF $258,690, plus $5,000 in legal costs.
SuperConcepts also notes that AFCA applies the $10 million threshold to “a broad range of advice involving SMSFs, rather than being limited to pensions, contributions or fund establishment matters”. An AFCA determination that the complainant accepts binds the firm, which is why many providers now take a cautious line with SMSF investors.
Where is the law contested?
The debate turns on a narrow question: when an SMSF invests in something that is not itself a superannuation product, such as units in a wholesale fund or a share of a loan, does the service “relate to a superannuation product”?
- One view is that it does not, so the general tests in s761G(7), including the $500,000 and certificate tests, remain available. SuperConcepts notes the lower thresholds “may be relevant where the financial service does not relate to a superannuation product”.
- AFCA’s view is broader: advice to SMSF trustees will generally relate to a superannuation product, so the $10 million test applies.
- ASIC said in 2014 that it would not take compliance action where SMSF trustees were treated as wholesale under the $2.5 million test for investment advice. But, as the SMSF Association has pointed out, that does not stop an investor pursuing a firm privately or through AFCA.
A parliamentary committee examined the wholesale tests in February 2025 and the government responded in March 2026, but, as SuperConcepts puts it, “the uncertainty has not yet been resolved”. Because the position depends on the specific product and service, trustees should confirm their fund’s classification with a licensed adviser or lawyer before relying on it.
How many SMSFs meet the $10 million test?
Relatively few. In March 2026, 672,805 SMSFs held $1.06 trillion between them, an average of roughly $1.6 million per fund.
That is the point critics make. Cooper Partners’ Jemma Sanderson told SMS Magazine the thresholds are “so outdated and way too low” for individuals, while the $10 million test sets a much higher bar for funds. The two tests measure different things, and the gap between them is where much of the confusion comes from.
What does this mean if your SMSF wants to co-fund a loan?
Co-funding with HomeSec is open to wholesale investors, and SMSFs commonly take part. When a fund co-funds, the loan agreement is prepared in the name of the fund’s trustee, the registered mortgage names the trustee for the fund’s exact contribution, and principal and interest are paid to the fund’s own bank account.
Because the fund is the investor, the fund’s classification is what counts. A fund with net assets of $10 million or more is on the firmest footing. For a smaller fund, the right course depends on the product and the test being relied on, and that is a question for your adviser before you commit. Some trustees with smaller funds choose to invest personally, or through a company or family trust, where the standard tests apply; others wait until their adviser has confirmed the fund’s position. Trustees should also check that the fund’s trust deed and investment strategy allow the investment.
What should SMSF trustees do?
- Check your fund’s net assets. If the fund has $10 million or more, the fund may qualify in its own right. Keep its financial statements or an accountant’s confirmation on file.
- Don’t assume your personal status carries over. A certificate about you is evidence about you, not necessarily about your fund. ASIC’s guidance also notes that a trustee with fiduciary duties cannot meet the control test for a trust’s assets.
- Ask which test is being relied on. When a provider treats your fund as wholesale, ask on what basis, and whether that suits the product.
- Get advice on your position. A short conversation with an SMSF specialist is worth having before your fund commits.
Our guide can an SMSF invest in private mortgages? covers the investment rules, and our page for SMSF investors explains how SMSFs co-fund with HomeSec, with the loan and mortgage in the fund’s name. If you are a trustee and would like to talk through how your fund might take part, register your interest and our Funding Manager will be in touch.
Frequently asked questions
Can an SMSF be a wholesale investor?
Yes, but the bar can be high. Where a financial service relates to a superannuation product, the Corporations Act treats a super fund as a retail client unless it has net assets of at least $10 million. AFCA has applied that approach broadly to SMSFs. Whether lower tests can apply to other investments is contested, so trustees should check with an adviser.
Can an SMSF use the trustee's accountant's certificate?
It is risky to assume so. In a 2024 decision, AFCA found an SMSF was wrongly treated as wholesale even though the trustee held a certificate showing $2.5 million in personal net assets, because the fund itself held less than $10 million. ASIC also notes that a trustee with fiduciary duties cannot meet the control test for a trust's assets.
Does the $500,000 test apply to SMSFs?
On the face of the Act, the $500,000 product value test is one of the general wholesale tests. But AFCA's approach treats services to SMSF trustees as generally relating to a superannuation product, where the $10 million test applies instead. Commentators describe this as unresolved, so trustees should not assume a $500,000 investment makes the fund wholesale.
What did AFCA decide about SMSFs and wholesale status?
In a June 2024 decision, AFCA found an adviser had wrongly classified an SMSF trustee as wholesale, because the fund had less than $10 million in assets, though the trustee's sophistication reduced the compensation. In a May 2026 case, AFCA ordered a firm to pay an SMSF $258,690 plus costs after it was wrongly treated as wholesale when investing in wholesale-only funds.
Is the SMSF wholesale test likely to change?
Not soon. A parliamentary committee reviewed the wholesale tests and reported in February 2025, and the government responded in March 2026, but the uncertainty for SMSFs has not been resolved in legislation. Industry groups, including the SMSF Association, have called for clarity.
Sources
- SMS Magazine — Wholesale investor limits obsolete (7 September 2026)
- SMS Magazine — AFCA holds $10m stance on wholesale investors (23 June 2025)
- IFA — AFCA seeks to clarify retail v wholesale classification for SMSF clients (June 2025)
- SuperConcepts — How to classify your SMSF as a wholesale client (August 2026)
- SMSF Adviser — Sophisticated investor definition 'complicated' in SMSF context
- Sprintlaw — Definition of professional investor under the Corporations Act
- ASIC — Certificates issued by a qualified accountant
- ATO — Highlights: SMSF quarterly statistical report, March 2026
Figures are as at 26 September 2026 unless stated. This page is reviewed by Catriona Anderson, General Manager of HomeSec Business Finance, and updated as markets change.
