SMSF Savings Accounts

What is a Self-Managed Super Fund (SMSF) savings account? 

A Self-Managed Super Fund (SMSF) savings account is a convenient way to save and invest for your retirement, with many providers offering zero fees, good returns and flexible access options. 

A SMSF savings account gives you complete control over where your superannuation is invested, as you manage the fund yourself rather than a regular super fund where the investment strategy is largely out of your control.

A savings account for self-managed super is different from a regular savings account in that they are designed to handle cash assets within an SMSF. There are all kinds of legal considerations when self-managing super, so finding a savings account that’s SMSF-compliant is important. 

Which banks offer SMSF savings accounts? 

InfoChoice compares a range of Self-Managed Super and Retirement savings accounts. Compare a range of SMSF savings accounts from major banks, and challenger banks and customer-owned institutions.  

Note that some banks may offer SMSF savings or bank accounts already in the pension phase. Banks include: 

ANZ 

Commonwealth Bank 

NAB 

Australian Military Bank 

Bank Australia 

Bank of Melbourne 

Bank of Us 

BankSA 

Beyond Bank 

Credit Union SA 

Geelong Bank 

Greater Bank 

Horizon Bank 

IMB 

Qudos Bank 

RaboBank 

Service One Alliance Bank 

St George 

Why use an SMSF savings account? 

Relatively safe investment 

Savings accounts are a popular, easy and relatively safe way to accrue interest on your cash deposits held in your SMSF. By default, all bank account products in Australia are backed by the Australian Government’s Financial Claims Scheme. 

Backed by the $250,000 Financial Claims Scheme 

The Government Financial Claims Scheme, or Deposit Guarantee Scheme, guarantees deposits up to $250,000 per banking licence, per person. This means in the unlikely event your bank went under, and you had $250,000 in that bank account, the government would guarantee the full deposit and you’d be able to recoup your losses. 

SMSFs must have a bank account 

It’s also law that the SMSF must have a bank account – can be transaction or savings – that is separate from the trustees’ personal banking accounts. If you have a cash-focused investment strategy in your SMSF, you may wish to have both a transaction account and savings account that accrues interest. 

You must also keep accurate records of each SMSF member’s cash entitlements, contributions, earnings and benefits paid. A SMSF may have up to six members – until recently this was only four. 

Accrue interest and pay for other assets 

Further, savings accounts accrue interest. This is different from having an SMSF transaction account, which likely yields little to no interest. 

Cash held in the SMSF may also be used to fund other investments for your SMSF, such as property, art, or other collectibles.  

Favourable taxation treatment 

As many people know with superannuation, including SMSFs, investments have a favourable tax treatment compared to regular investments held outside super. With an SMSF this is 15% in the accumulation phase or when transitioning to the retirement pension. 

As SMSF savings account interest is locked away until preservation age or retirement, it won’t be taxed as regular income. Regular income made from savings account interest is taxed at your marginal income tax rate. So if your top income tax rate is 32.5%, income made from savings account interest will be taxed at that rate too. 

SMSF savings account interest rates and earnings 

You may have noticed that SMSF savings account interest rates are lower than what you can find with regular savings accounts. What you’ll have to consider is the taxation treatment, as mentioned earlier, and consider that they will likely be treated differently at tax time. 

If your marginal income tax rate is 32.5% for example, you can basically wipe that off any gains you stand to make on a regular savings account. 

If you had a regular savings account rate of 4.00% p.a. on a balance of $50,000, that’s $2,000 in interest income earned. On this tax rate, that would likely result in $1,350 net interest income. 

This is roughly the equivalent of a 3.20% p.a. savings account rate held within the SMSF, with a net $1,360 earned on the same balance. 

Of course, if your marginal income tax rate is greater (say 45%), the differences will be more pronounced. 

What if my bank doesn’t offer an SMSF savings account? 

Not all banks offer savings accounts for SMSFs. One way around this is to find a bank account offered to businesses. It is possible to set your SMSF up as a trust, and many banks allow business savings accounts to be opened by trusts.  

What to do after you open your SMSF savings account 

If you’ve already got a SMSF, you probably know they can be a compliance minefield. After you open your SMSF savings account, you’ll likely need to update your fund’s investment strategy. An investment strategy is a legal document that not only details what you’ve invested in, but why. 

It used to be the case you could be fairly vague and just provide a breakdown as to how big of a proportion of your assets are given to cash, property, shares, and more. Now you have to provide a reason as to how these investments benefits trustees and members.  

An investment strategy will likely need to be updated every financial year, when a major economic event happens, if you add a new asset (such as a SMSF savings account), or if a member dies or leaves the fund.  

Is an SMSF the right option for you? 

SMSFs aren’t always the right option for everyone. 

There are a few things you need to take into consideration such as the amount of administration work that’s required to maintain an SMSF, the different costs involved and the benefits and risks to consider. 

1. Admin and compliance 

There are some basic rules that need to be adhered to when running your own SMSF. Make sure you meet the following criteria and stick to the rules: 

No more than six members (used to be four) 

Must have either a corporate trustee or an individual structure 

Must be registered with the ATO 

Must only be used to provide retirement benefits to members 

Your fund must have a documented investment strategy kept on file 

This strategy must be continually reviewed and updated to make sure all members’ needs are met. All changes must be documented 

Investments must satisfy the ‘at arm’s length’ and ‘sole purpose’ tests: This means the investments are held at arm’s length from members – e.g. not renting a property to a family member – and only for the purpose of providing retirement benefits to members. 

2. Rules on contributions 

The fund can accept contributions from employer contributions, personal contributions, salary sacrifice contributions, super co-contributions and eligible spouse contributions. All contributions must be documented and allocated to the fund member’s account within 28 days. 

Each member’s concessional (pre-tax) contributions must not exceed $27,500 per annum regardless of age, and the non-concessional (after-tax) contributions cap is $110,000. Members under 75 years of age may be able to make non-concessional contributions of up to three-times the annual non-concessional contributions cap in a single year. 

The transfer balance cap is $1.7 million. 

3. Annual ATO admin 

In order to remain compliant with the ATO there are some admin tasks that need to be performed each financial year: 

An audit must be carried out each financial year by an approved SMSF auditor. 

All assets must be valued each financial year. 

An annual operating statement must be prepared and lodged with the ATO. 

An annual return must prepared and lodged with the ATO and the annual supervisory levy must be paid.