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Hassan Izzet

May 04, 2021

Overdrawn Member Account Balance

in SMSF Technical Forum

Is it an Audit Contravention, if a member of an SMSF has withdrawn $7,000.00 in super benefits as a part of the Covid-19 early release of super program.

The lumpsum withdrawn was in excess of the member’s current account balance and consequently the account is overdrawn.

Interestingly, the Covid-19 early release of the member’s super benefits from their SMSF was approved by ATO.

1 answer2 replies

Comments (3)

THE AUDITORS INSTITUTE

May 04, 2021

Hi Hassan

My view is that it is a breach of regulation 5.08 of SIS that requires "member minimum benefits must be maintained in the fund until transferred, rolled over,

allotted (to the member’s spouse) or cashed out in a permitted fashion". That is by the member going into negative it means that another member's benefits have not been maintained. It is also arguably a breach of Reg 6.17 (payments of benefits to members), Section 65 (financial assistance to a member) and section 62 (the sole purpose test). As the breach is less than $30,000 you may not need to lodge an audit contravention report (ACR). You will need to work through the ACR instructions to see if you need to lodge an ACR with the ATO.

Thanks

SMSF AAA

Hassan Izzet

May 05, 2021

Replying to

Considering the above overdrawn account balance for the 2020 Fin. year for member, will it be possible to rectify the problem via spouse Superannuation contribution splitting (assuming max. 85% split is sufficient to revert the member back into a positive account balance?