“We are seeing a lot of these problems, which is a breach of reg 4.09A,” Banton said.

“It's one of the highest reportable breaches the ATO is receiving from SMSF auditors. Under reg 4.09A, SMSF assets need to be kept separate from the trustees’ personal assets and that includes not only individual trustees but also directors of the corporate trustees in their personal capacity.”

Banton said one of the main issues seen by auditors is withdrawals in error, which she believes are set to increase as banks continue to close branches and force customers to use online banking.

“This is where elderly trustees get hit the most because they don't understand how it works, and they can easily click on the wrong account,” Banton said.

“A lot of hand-holding is going to be required here to help navigate these trustees to get used to that online banking. There's probably going to be a few breaches along the way, which is inadvertent.”

However, she said this may not raise compliance action from the ATO, depending on the circumstances of the breach.

She continued that other issues with the separation of assets include insurance policies in the name of only the members.

“It’s important to remember that you can't transfer the policy over to the fund where it's in the member’s personal name, because that will be a breach of Section 66, which is an acquisition of assets from a related party,” she said.

“Another issue is where an asset has the wrong trustee, but it's held in the name of the fund. This mainly happens when there's a change of trustee and the asset has to be transferred over to the name of the new trustee as soon as possible. When it's not done, there can be a lot of confusion about who actually holds the asset because there could be claims on fund property if there's a dispute.”

Banton said using a declaration of trust to fix an asset with the wrong title can result in a stamp duty disaster for trustees.

“One of the first problems is where a trustee makes a mistake by putting the wrong entity as the owner of that fund asset, and then they just try and paper it over with setting up a declaration of trust.”

“In reality, a declaration of trust is only ever good before the asset is purchased and not afterwards. If the asset is property and a declaration of trust is signed after the purchase, that can trigger double stamp duty.”

Banton said auditors used to ask for acknowledgements of trusts to be set up instead of a declaration of trust after the purchase. However, there have been changes to the legislation in NSW and Victoria that could result in an acknowledgement of trust triggering stamp duty.

“That's going to have financial consequences if the asset is property, so you need to be careful about what you're getting your clients to sign to confirm ownership, especially in certain states,” she said.

“You should potentially think about getting them legal advice to make sure they're not triggering that double stamp duty. There really has to be a legitimate reason for why the asset isn't held on behalf of the trustee with the fund as a beneficial owner.”