SMSF trustees who make a withdrawal from their fund instead of a personal account may be able to argue it was accidental, but are likely to face questions as to why those assets were not kept separately, an SMSF technical specialist has noted.
Heffron senior SMSF technical specialist Annie Dawson said an accidental withdrawal from an SMSF where a member did not meet a condition of release and where the money was returned to the fund was unlikely to be considered a loan to a member, but may still breach the Superannuation Industry (Supervision) (SIS) Act.
“When you’re approaching a question like this, it’s important to ask: is this really a transaction that’s in error where the member has inadvertently paid a personal bill from the fund’s bank account?” Dawson said during a recent webinar.
“At the time of the transaction there was no intention to use the super fund money and they just accidentally picked the wrong bank account – in those instances it won’t be a loan to a member because that wasn’t the intention.
“We would be more concerned that the fund has breached a different section of the SIS Act, which is section 52.B(2)(d) and SIS regulation 4.09A that talks about fund assets being kept separate from the trustee’s assets.
“In this case, if the member of the fund was an individual trustee of the fund, then certainly they would breach that section of the act and the regulations because they have mixed up the assets.”
She said any trustee who has made an accidental withdrawal will be considered to have made a loan to a member and therefore breached section 65 of the SIS Act if they did not repay the money to their fund as soon as they became aware of the error.
Auditors concerned over a withdrawal should ask for a paper trail for any withdrawal to prove it was accidental, she said.
“From an auditor’s perspective, it’s important to get evidence and ask for evidence of the intention. Look at what’s on the bank statements so you can get a sense of what happened at the time,” she said.
“Getting a statutory declaration is important as it asks people to confirm what their intentions were and also documents that it really was an error that has been subsequently rectified.”