The SMSF bank account rules require a self managed superannuation fund (SMSF) to open a bank account in the Fund’s name.
When the SMSF is setup, a main bank account will need to be opened.
This bank account will be used to manage the activities and operations of the SMSF.
Ideally, the main bank account should be used as a gatekeeper for the SMSF.
All contributions and rollovers should be made to this bank account and all lump sum withdrawals or pension payments should be paid out of this bank account.
Using the main bank account as a hub in this manner will significantly ease the administration of the Fund and make accounting easier.
SMSF Bank Account Requirements
The SMSF bank account should be opened through an Australian authorised deposit-taking institution (ADI).
Within 60 days of establishing an SMSF, the Fund needs to be registered with the Australian Tax Office (ATO).
Part of this process involves providing the ATO with the financial institution details of your SMSF bank account.
It is also important to update the ATO with any changes to your SMSF.
SMSF Bank Account Rules
It is essential that the SMSF bank account is kept separate from other personal, or business bank accounts.
All transactions on the SMSF bank account should relate solely to the activities of the Fund.
There are harsh penalties for using SMSF savings for any purpose other than for the retirement benefit of SMSF members.
Generally, an SMSF bank account will accept all contributions, rollovers and investment income and will pay all withdrawals, pension payments and costs associated with running the SMSF.
SMSF Setup & SuperStream
As part of the setup of your SMSF bank account, you can apply for an electronic service address.
This can provide you with SuperStream data information about employer contributions made to your SMSF.
Can a SMSF have more than one Bank Account?
The SMSF Bank Account rules do not restrict the number of bank accounts that a SMSF can have.
An SMSF can have multiple bank accounts and term deposits.
However, in order to maintain organisation, ease of administration and simplified accounting, it is generally suggested that all external contributions or rollovers into the SMSF and all withdrawals from the SMSF be made from the same account.
By using the same bank account for all contributions and withdrawals, it is easier to keep track of things such as contribution limits, rollover amounts, pension payments, lump sum withdrawals and fees and expenses.
Other bank accounts might be useful for intra-SMSF transfers.
For example, your SMSF may have a specific account to receive investment income, or a specific account for rental property income and expenses.
As a bank account within the SMSF forms part of the Fund’s overall portfolio, it is imperative to ensure that the bank account and ongoing balance is accounted for in the SMSF Investment Strategy.
All SMSFs must have a formal Investment Strategy to maintain compliance.
It is not a requirement for an SMSF to have a bank account for each member.
Best SMSF Bank Accounts
There are a number of SMSF bank account providers.
Arguably, the Macquarie Cash Management Account (CMA) is regarded as one of the best SMSF bank accounts, as it is used by around 1/3rd of SMSFs in Australia.
Ideally, to be the best, you want an SMSF cash hub account to be able to be viewed online by your financial services professionals (accountants, advisers, etc.) and provide a competitive interest rate.
Ultimately, functionality is a key driver in determining the best bank account when it comes to SMSFs, to streamline the activities and transactions of your Fund.
SOURCE, All rights reserved to – The Super Guy, Jan 18, 2019, Chris Strano, SMSF Bank Account Rules, http://www.superguy.com.au/smsf-bank-account-rules/
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