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Bank statement can’t provide strategy order

SMSF bank statement

Transaction narratives appearing on an SMSF bank statement have no relevance in determining which member account a withdrawal is applied against.

Descriptions associated with certain transactions appearing on an SMSF bank statement can play no part in determining how a fund withdrawal is to be treated for strategic purposes, a technical specialist has said.

SuperConcepts SMSF technical and strategic solutions executive manager Philip La Greca made the observation when asked during a recent webinar if details of a drawdown payment contained on an SMSF’s bank statement are sufficient proof the sum was intended to be treated as a lump sum taken from the accumulation account of the fund.

“You have to understand that [description] is not actually coming from the member. This is one of the subtle things people sometimes forget. The bank account does not belong to the member, it belongs to the fund,” La Greca noted.

He pointed out the relevant question needing to be addressed is how the trustees of the fund know whether a payment to a member is to be allocated from the accumulation or pension account.

“So the member has to [specifically] say to the trustee ‘please pay [the amount] from my accumulation account’.

“Putting it on the bank statement the fund uses is just saying ‘this is where we’ve paid it from’. It doesn’t say how the trustees made that decision.

“[You have to show] where they got that instruction from to make that decision because that’s really what we’re trying to say – that the trustee’s default position is that ‘I always pay from the pension account’, unless the member told them [otherwise] and how do [you] prove the member told them [to pay it out of the accumulation account].”

He acknowledged the bank statement description could still be of use from a different compliance perspective.

“[It can serve as] an additional record for the auditors that it is coming from the accumulation account, but [there has to be a separate] original instruction,” he advised.

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