ATO warns about SMSF compliance risks with schemes involving asset protection

The ATO has issued a warning on its website directed to trustees, stating: “Certain schemes involving asset protection arrangements are on our radar as they present a compliance risk for self-managed super funds.”

The schemes the ATO has concerns about claim to protect SMSF assets from creditors by mortgaging them to an asset protection trust, commonly called a Vestey Trust.

It said that should an SMSF trustee enter into these schemes, they may contravene superannuation laws and that penalties may apply.

The ATO advises that with the super system already protecting SMSFs from creditors, these schemes are putting funds at unnecessary risk. They state that: “If trustees are already involved in one of these schemes and think it contravenes the super laws, they should make a voluntary disclosure. We will take this into account when determining any compliance action.”

How we can help

More and more people are opting for an SMSF, as it can provide much greater flexibility and a way of keeping costs down.

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Last updated: 10th February 2023