A withdrawal from an SMSF before a member has met a condition of release can be treated as a genuine error and returned to the fund as long as factual evidence can substantiate the claim, a senior sector stakeholder has said.
Accurium head of SMSF education Mark Ellem noted this would be the predicament facing trustees when asked whether a withdrawal of $2000 from a super fund’s bank account, instead of an individual’s, could simply be redeposited.
“The first thing I’d be asking is: If you took the $2000 out of the fund’s bank account on this day, what was the balance of your personal bank account on that day? If it was less than $2000, it wasn’t a mistake. You needed the money so it was a borrowing,” Ellem told delegates at the recent SMSF Professionals Day 2025 co-hosted by selfmanagedsuper and Accurium.
“So you need facts to back up the claim. Another valid point to establish would be whether your personal bank account is held with the same institution as the super fund’s bank account so when you go onto internet banking they are all listed together and you just selected the wrong one.”
According to Ellem, the timeframe in which the error was detected and remedial action taken will also be an influencing factor and referenced his own experience to this end.
“I’ll admit I did that a year ago when I went to pay my SMSF auditor’s bill and paid it out of my personal bank account. I realised the error straightaway and immediately refunded the money on the same day and then prepared a minute, again on the same day, and sent it to my auditor. I confessed my sin,” he revealed.
He emphasised the quicker rectification action is taken, the more likely the original transaction will be seen as a genuine error.
“If it takes a week or six months or longer to take action, it doesn’t look like a mistake,” he warned.
