ATO determination TD 2014/7, issued last year, specified the circumstances in which the bank account of a complying super fund is a segregated current pension asset, Ms MacFarane said.

“Since issuing this determination we’ve received a steady flow of questions with respect to the partial segregation of other asset types,” she said, but noted the tax office considers “that it’s not possible to segregate part of an asset”.

“If you can’t separate an asset – for example, a holding of real property – how can you demonstrate the asset was separate and held solely to support pension liabilities?”

This did not apply to parcels of shares, however, given that each individual share was an asset in its own right, she added.

“If the fund holds 100 shares in a company you could say, for example, that 50 were segregated," Ms MacFarlane said. "We would expect this segregation of assets and the related income to be appropriately documented as being so."

Ms MacFarlane also discussed the ATO’s concerns about some SMSFs' inability to make pension payments because of significant allocations to real property.

“It’s not my intention to comment on whether or not real property is a good long-term investment; I just want to point out that it is undoubtedly a lumpy and illiquid asset and can present a liquidity problem, especially when it’s an SMSF’s major asset,” she said.

“For example, we see SMSFs paying pensions where the net rental income is insufficient and there are no other liquid assets or contributions being made to the SMSF.”

Ms MacFarlane said this issue is often exacerbated in situations where the main asset in a SMSF is business real property leased back to a related party.

“Not only is the fund in jeopardy of failing to make the required minimum pension payments but in precarious economic times, such as the 2008 GFC, where the related party’s business also suffers, SMSFs can also lose their tenant or the commerciality of the lease arrangement can come under pressure,” she said.