Government guarantees cash deposits in SMSFs
The Government has guaranteed cash deposits for three years in approved deposit taking institutions (ADIs) that are owned by self-managed superannuation funds (SMSFs), drawing praise from the SMSF Professional Association of Australia (SPAA).
The guarantee covers deposits in Australian-owned banks, local subsidiaries of foreign banks, credit unions and building societies. It also covers deposits held in eligible institutions, regardless of where the depositor lives, and deposits in foreign branches of Australian ADIs incorporated in Australia.
The chief executive of SPAA, Andrea Slattery, welcomed the Government’s cash deposit guarantee, but warned that cash management trust (CMT) accounts do not qualify for the guarantee as they fall under a unit trust arrangement.
“A significant amount of cash in SMSFs is currently held in CMT accounts. It is good to see that the institutions which service the SMSF sector are already taking the necessary steps to ensure that up to 100 per cent of the CMTs’ investments are eligible for [the] Government guarantee,” Slattery said.
“Trustees must review their CMT account or seek advice if they need assistance in understanding what arrangements are currently in place,” Slattery said.
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