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SMSF assets & ownership requirements

Trustees of SMSF’s are required by law to keep money and other assets of their fund separate from any money and assets that are either held by them personally or by a standard employer-sponsor or an associate of a standard employer sponsor of the fund.

The Tax Office has now released a guide on ownership requirements, including the key principles of asset protection of the SMSF, including:The maintaining of separate bank accounts for all fund monies to be received, paid and held;

  • SMSF assets are not a form of credit or a contingency fund when faced with a sudden financial need – it cannot be used under any circumstances for personal or business purposes; and
  • It is the trustees’ responsibility to ensure the fund’s assets are securely held in a legally recognised ownership arrangement.

Where a corporate trustee acts as trustee for the fund, the assets must be held by the corporate trustee ‘as trustee for the SMSF’. When there is a change in directors, the ownership documents for each fund asset is still in the same name.  Where individual trustees are used, the assets must be held in the name of the individuals ‘as trustee for the SMSF’. When there is a change in individual trustee, this may require having to change the ownership name of all individual assets of the fund and may involve a substantial amount of work.

The Tax Office has stressed that it understands that in certain circumstances or jurisdictions, the property title may not be able to be held in the name of the fund. However, it is important to clearly document ownership of the fund’s assets to support evidence of the fund’s rights and title over the assets.

Note: There are different requirements for fund assets acquired under a limited recourse borrowing arrangement.

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