What if your SMSF shares a bank account with various ‘related’ unit trusts? ATO guideline ‘ID 2014/7’ clearly marks out the course of action in such an event and talks about the regulations pertaining to keeping your SMSF money and assets segregated.
Keeping SMSF money and assets segregated
Trustees should not mix money and other assets of their SMSF with the same held personally by trustees, employer sponsors, or associates. Instead, it is recommended that one should to go through SIS Regulation 4.09A.
Standard employee sponsor
If an SMSF happens to have a standard employer sponsor (being part of the family business) and control unit trusts solely or jointly, along with related parties, sharing of bank accounts can involve a regulation breach. This is because the related trusts are deemed as associates of the employer sponsor. The breach, as can be gauged, is open to penalties, ranging from mild to severe.
Reasons for sharing bank account
Ease of administration and cost savings are two popular reasons why trustees opt for a single bank account but then, as has been established, you might be biting more than you can chew in the given case.
ATO ID 2014/7 bases itself specifically on bank accounts. This said, Regulation 4.09 of SISR has a much wider arc, administering over shares, trust units, and properties apart from the bank accounts.
Have you had the ATO blowing hot when you breached some regulation?