SMSF savings accounts: How they work?

Under Australian superannuation law, a self-managed superannuation fund’s (SMSF) assets must be separate from the personal finances of its members and trustees. If you establish an SMSF, you need to set up a bank account in the fund’s name as well.

See also: A step-by-step guide to setting up an SMSF

While a transaction account will do, a dedicated SMSF savings account can be a good way to put surplus cash to work in between investments or when market interest rates are offering good returns. 

Let’s talk about finding the right savings account for your SMSF. 

What is an SMSF?

Let's start at the beginning. An SMSF (self-managed superannuation fund) is a private super fund that you manage yourself rather than outsourcing to a superannuation provider.

It can have up to six members who are all either individual trustees or directors of a corporate trustee. All are equally responsible for decisions made about the fund and the fund's compliance. 

A trust deed sets out how the SMSF will be run and its objectives, and an investment strategy outlines how it will manage and invest its assets. 

Why SMSFs need a dedicated bank account

The Australian Taxation Office (ATO) requires SMSFs to have a bank account for fund transactions, including:

• Accepting employer and personal contributions
• Receiving income from investments
• Paying for the SMSF’s expenses and liabilities
• Paying for members’ benefits (where applicable)

Data from the ATO indicates cash is the second-most popular asset held in SMSFs in terms of value. The most popular is listed shares. 

SMSFs often hold cash between investments, while waiting to deploy capital, or to meet liquidity requirements. While some funds may choose to hold their cash in transaction accounts, a savings account offers accessibility while allowing that cash to earn interest rather than sitting idle. 

Features of a good SMSF savings account should include a competitive interest rate, flexible access, and low or no fees.

1. Savings.com.au's two cents

An advantage of savings accounts is that they can provide a low-risk investment, with amounts up to $250,000 guaranteed under the federal government's Financial Claims Scheme. They can earn interest on cash held for day‑to‑day operations while still offering flexible access.

Shopping around for a competitive interest rate can make a meaningful difference to returns, but it’s just as important to check any conditions and fees and ensure the account suits your fund’s needs.

Some regular high‑interest savings accounts may be suitable for SMSF use, while others are not, so it’s important to do your research and confirm the account complies with superannuation laws and ATO requirements.

What's the difference between an SMSF savings account and a regular savings account

An SMSF savings account is registered in the legal name of the SMSF, not in the name of any of the trustees or members. 

• It can only be used for SMSF transactions and not be used by any other entity or individual.
• It keeps the SMSF’s money separate from members’ personal finances, as required by superannuation laws.
• But it typically allows multiple trustees or members to access the account, much like a joint account. 

Many personal savings accounts cannot be used by SMSFs because they’re designed for individuals, not trusts or super funds. It's important to check with the specific bank or financial institution first to be sure which accounts are able to be used by an SMSF. 

1. Take note: Most SMSF, or SMSF-compatible, savings accounts pay interest, but some may only offer interest on balances above a certain amount. It's worth finding an account with a competitive interest rate that doesn't put up too many hurdles to achieve it as well as no, or low, fees.

Ryan Walker

Financial Planner and Founder, Shire Financial

Different bank for your SMSF

We recommend keeping your SMSF banking with a different bank to your everyday bank to help be mentally aware that the SMSF bank account is strictly for SMSF purposes. 

Mixing personal and SMSF income and/or expenses is a compliance risk.

SMSF savings account features

Some features of SMSF savings accounts should include:

1. Government $250,000 guarantee

Like regular savings accounts, term deposits, and transaction accounts, SMSF savings accounts provided by APRA-recognised banks are covered by the federal government's deposit guarantee, via the Financial Claims Scheme (FCS), up to $250,000 per SMSF per bank. 

1. Interest-earning

Most SMSF savings accounts pay variable interest on balances. Rates may be tiered by balance size or subject to minimum balance thresholds. This varies by bank so it’s worth comparing your options. 

1. Multiple trustee access

An SMSF savings account typically allows each member of the fund to access the account, much like a regular joint account.

1. Online and mobile banking

Many SMSF savings account providers allow the accounts to be managed via a mobile app, online, or over the phone.

1. Linked accounts

Some SMSF savings accounts may be linked to a transaction account that allows members to move money between day-to-day operations and interest-earning cash. 

How to choose an SMSF savings account

An SMSF savings account is primarily a cash management and compliance tool, so the right choice depends on more than just the headline rate (though choosing one that pays interest is worthwhile too).

Make sure the account is SMSF compliant

While very similar in function as regular savings accounts, SMSF savings accounts are specifically registered in the name of the SMSF and are limited to the fund's financial transactions only. 

As such, confirm that the account can be opened in the legal name of the SMSF, it allows it to be used by trusts and superannuation funds, and it supports multiple access. 

Look how the interest rate is earned

If you have any amount of cash, it may as well be earning as much interest as possible. And if you have a large sum of cash, it's even more important. So interest matters. But more than that, examine how the rate works. 

Check the following when comparing your options: 

• Whether the rate is ongoing or introductory
• If interest is tiered by balance
• Any balance thresholds
• Whether conditions apply (e.g. no withdrawals or minimum balances)

See also: The different types of savings account interest rates

Check fees carefully

Some SMSF accounts may charge account-keeping fees that can effectively take a slice of any interest you earn, while others won't charge anything at all. Be sure to read the fine print of the SMSF savings products you're considering.

Consider access and liquidity needs

Think about how the cash will be used by the fund. Ask yourself: Can the funds be transferred easily to a linked transaction account? Does the account have any withdrawal or transaction restrictions? 

Morgan Wilson

Founder and Director, Creditte Chartered Accountants and Advisors

Accessibility beats interest

Look for an account that produces clean transaction records. Your auditor will need a clear paper trail every year.

Online access and easy statement exports matter more than the interest rate.

What are the best SMSF savings accounts on the market?

The Australian SMSF savings market is small, but competitive. It includes SMSF-specific and SMSF-compatible products. 

Interest rates can vary according to the account balance and other conditions being met. Generally, a good SMSF savings account should come with no account keeping fees.

Here are some SMSF savings accounts currently available on the market:

Details are correct at the time of writing and are subject to change.

Do the big four offer SMSF savings accounts?

Australia's big four banks also offer SMSF accounts, although some are transaction or business accounts that can be used for SMSF purposes. 

It's worth noting their interest rates tend to be considerably lower than those of other banks with specialist SMSF savings products.

Details are correct at the time of writing and are subject to change.