New ATO Guidance on Ownership and Separation of SMSF Assets

The Australian Taxation Office (ATO) has released long-awaited guidance for SMSF auditors regarding the ownership and separation of fund assets, specifically addressing the application of Regulation 4.09A. This targeted clarification is a welcome development, particularly as previous ATO web content appeared to extend the regulation’s scope beyond its original wording.

Crucially, the ATO emphasises that Regulation 4.09A, along with the trustee covenant in paragraph 52B(2)(d) of the Superannuation Industry (Supervision) Act 1993 (SISA), is designed to safeguard fund assets in the event of creditor disputes and to avoid costly legal proceedings to establish ownership. At Assurify, protecting the retirement benefits of SMSF members is a core priority, making this focus especially relevant to our work.

A notable aspect of the guidance is the ATO’s acknowledgement that an asset held in an incorrect name does not automatically constitute a breach of Regulation 4.09A. Whether a breach has occurred depends on the fund’s trustee structure and how the asset is recorded. This nuance is a key consideration in our audit procedures.

Even where circumstances do not amount to a contravention of Regulation 4.09A, the ATO suggests that it may still be prudent for trustees to take steps to ensure assets are held or titled appropriately to protect them. In such cases, auditors are encouraged to communicate these recommendations to trustees via the management letter.

The ATO also comments on the role of special purpose trustee companies. Based on our experience, establishing a special purpose trustee company is one of the most effective ways to reduce the risk of breaching Regulation 4.09A in relation to asset ownership within an SMSF.

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