February 2020 Breakfast Club

The Tax Institute

When most people think of self managed superannuation funds (SMSFs) they mostly think of a vehicle to provide retirement benefits and their concessional tax treatment. In contrast, the asset protection benefit provided by SMSFs is often not considered.

In relation to asset protection and SMSFs there is broadly three types of asset protection considerations. Those are creditor risks, family law risks and death benefit challenge risks. This paper will deal with creditor risks. Therefore, all references to asset protection in this paper will be confined to asset protection as it relates to creditors.

Creditor asset protection in relation to SMSFs has 2 parts, protecting a member’s benefits/interest in the SMSF from the member’s creditors and protecting the assets of the SMSF against the SMSF’s creditors. This paper will examine both of those parts. In addition, this paper will examine the consequences for an SMSF where a member becomes bankrupt.

Although I relied on a number of sources for this paper I would like, in particular, to acknowledge the papers of Denis Barlin, Superannuation and Asset Protection and David Foulds, Superannuation and Bankruptcy.

All references in this paper are to the Superannuation Industry (Supervision) Act 1993 (SIS Act), the Superannuation Industry (Supervision) Regulations 1994 (SIS Regs) and the Bankruptcy Act 1996 (Cth) (Bankruptcy Act) unless otherwise stated.

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