Using SMSF cash as offset account

Hi all,

I seem to spend most of my time thinking of ways to pay off the home loan sooner....:rolleyes:

If I had a SMSF and there was cash held in a bank account in the name of the SMSF, do you think that account could be linked up as an offset account against a home loan so as to reduce interest? Would the bank accept this? The account names wouldn't match exactly (the home loan would be G Farkus and the SMSF would be G Farkus Super Fund) but the bank would still have "use" of the credit funds held in the SMSF bank account.
 
Dont do it. It really breaks the 'sole purpose' test. SMSF funds must be held in an account which has the same name of the Super Fund; and NAB for instance, says that the offset account must be in the same name as the loan account, which is your personal names (or a Trust I guess).
 
Might be possible from a bank product view, dont think though the SMSF act would like it too much

ta
rolf

'Might be possible' are words I like to hear...

I'm confused though about where the breach of the SMSF Act would come in: the credit funds would be held in a bank account in the name of the SMSF (so are invested in a correct manner) and there's nothing to show in the SMSF books that the account is also an offset account. Or does the SMSF need to declare that?
 
Dont do it. It really breaks the 'sole purpose' test. SMSF funds must be held in an account which has the same name of the Super Fund; and NAB for instance, says that the offset account must be in the same name as the loan account, which is your personal names (or a Trust I guess).

So it just comes down to finding a bank (other than NAB) that is fine with the two accounts being in different names then potentially OK?
 
Don't just latch on to what you want to hear. If you are currently operating an SMSF and think that what you are proposing is a legitimate use of the funds, you need to go back and look at your duties as a trustee.

The sole purpose of superannuation is to provide for retirement. You are wanting to use the offset to reduce your mortgage interest, that is not for the purpose of retirement - no matter what arguments you use. Therefore, using the SMSF monies will put you in breach. Congratulations when the ATO gets on to that you lose your exemptions in SMSF and pay 46.5% tax.

Your fund's auditors will catch it eventually and the ATO is putting extra resources into SMSFs
 
Dont do it maan, what you're intending to do is wrong and ATO will find out!!! you can't use your super money to lower the interest on your existing property!!

Been there done that.... i am being audited by ATO now but i have a plan with my super money.... this time i am doing it by the book!!!
 
No bank will open an off-set account unless it's in the same name as the borrowers and so trying to off-set funds held by your SMSF would definitely not be allowed.

Secondly, and as JRC has said you would be in breach of the SIS Act big time no matter how you think it may be done.
 
I like this idea. I can't see why you couldn't argue the point that your super would be paying off your mortgage when you retire in a lump sum therefore your mortgage would be lower by use of an offset account today therefore leaving more in your super. This money is not earning 2.5% but 5% it's avoiding on your mortgage. It's still arms length as you cannot access it but it's bettering your retirement outcome.
 
Rule #1 - you are receiving a benefit (outside of the SMSF) from the investment. Immediate breach of the Act. Do not pass go, do not collect $200 - quite likely become disqualified from holding a SMSF.
 
Rule #1 - you are receiving a benefit (outside of the SMSF) from the investment. Immediate breach of the Act. Do not pass go, do not collect $200 - quite likely become disqualified from holding a SMSF.

I understand this, but how many people use their retirement super to pay off the mortgage? rule #1a super is for retirement purposes so if you could lower your mortgage over say 10 yrs then there will be more retirement money in the kitty and no need for lump sum payouts you are not accessing it but using it to your advantage to a bigger super balance. (why not divert this saving into super? sorry cant put anymore than ~25k you lose again) Of course the banks don't like it, or the govt as they miss out on their cut, back to #1a super is to benefit me/you in retirement.
Super is the biggest con of the century, put it in the sharemarket gamble govt still gets a cut if you win or lose, put it in the bank get inflation rate at best.
 
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