Retirement income entities: keeping assets of a self managed superannuation fund separate from assets of other parties.

Has a contravention of subsection 52(2) of the Superannuation Industry (Supervision) Act 1993 (SISA) occurred where a self managed superannuation fund (SMSF) shares a bank account with related unit trusts?

Yes, each SMSF must open and maintain its own bank account to keep its assets and money separate from that of other entities.

The trustees of the SMSF are members of a family.

The fund has a standard employer-sponsor and all the trustees work for the standard employer-sponsor in various capacities.

There are several unit trusts owned and operated by the SMSF and/or the trustees.

The trustees have stated that, for administrative simplicity and cost savings, unit trusts jointly owned by the SMSF and trustees as well as units trusts owned by the SMSF operate the one bank account. The account is held in the name of the SMSF.

Section 52 of the SISA prescribes the covenants which are taken to be included in the governing rules of a regulated superannuation fund. In particular paragraph 52(2)(d) of the SISA requires the trustees to keep the money and other assets of the SMSF separate from any personal money and assets of the trustees and money and assets of a standard employer-sponsor, or an associate of a standard employer-sponsor, of the SMSF

The unit trusts are associates of the standard employer-sponsor in accordance with section 12 of SISA.

The published position of the ATO on separation of assets advises trustees that an SMSF should not share a bank account with any other entity.