“Anyone who's involved in the transaction can potentially be penalised,” Formica said.

“[There was a case] where an accountant, Holloway, went to jail as he had a number of self-managed superannuation funds that were investing in in-house asset avoidance schemes that he had suggested.”

Formica explained that section 85 is the anti-avoidance provision within the Superannuation Industry (Supervision) Act that states an SMSF is prohibited from entering into a scheme that is attempting to artificially reduce its in-house asset ratio.

“[That is] it looks like you don't have an in-house asset when in fact you do, and you're over that 5 per cent limit.”

Historically, it was quite common to have issues with avoidance rules where, for example, an SMSF was investing in a unit trust and the unit trust might have not been a related unit trust, so it was exempt from the in-house asset rules.

“However, that unit trust then goes off and lends money to a related party of the SMSF, and depending on what's going on there, that looks like avoidance because the superannuation fund would have had a 5 per cent limit if it was lending money to a related entity,” Formica said.

“The fact that you've gone through the unit trust instead, it looks like you're trying to hide something. [The question needs to be asked] why you invested in the unit trust only for the unit trust to then lend money to that related entity.”

She added that the strategy would be potentially picked up as a scheme, assuming, of course, the requisite intent was there.

Shelley Banton, head of technical for ASF Audits, said there are a number of scenarios that could apply depending on whether the transaction is in or out of the fund, directly or indirectly.

“But the ATO doesn't really discriminate against that. It just looks at section 85 because it applies to any sort of scheme or plan,” Banton said.

“It doesn't have to be written down. It can just be something that you can see. Don't forget that auditors always look through sundry debtors. There may only be some amount that's immaterial in that at the end of the year, but you can get a lot of transactions being washed through those sundry debtors during the year.”

Banton emphasised that these are also scrutinised at audit as well.

“Things like lending to a related party, and some of those things that you see directly in the fund [are scrutinised],” she said.

“And then, of course, you've got that amount that goes up beyond that 5 per cent before 30 June, and just on 30 June, they pay it down to under 5 per cent, and on 4 July they take that money out once again. That's something that's not kosher, and is looked at poorly by the entire SMSF industry.”