It’s essential that auditors receive all relevant documentation when funds are released. While some clients may find these requests frustrating, they should be reminded that benefit payments are a standard part of operations, and auditors need proof that all conditions of release have been met.

“This is one thing that we often see overlooked in a self-managed super fund. [A member may say] ‘I know I'm terminally ill. I'm the sole director of my SMSF and the sole member, so why do I need to get that certification for the auditor and for tax purposes?” she said.

“Those records need to be kept, and not overlooked. The same goes if it concerns a total permanent disability, which also needs to be proven to the auditor.”

Steed continued that another key difference for SMSFs concerns conditions of release relating to a limited recourse borrowing arrangement that started on or after 1 July 2018, particularly where it involves a related-party loan, or where members meet a condition of release without any cashing restrictions.

“The amount of the LRBA that is supporting that member's benefits gets added back to calculate their total super balance. It's the only time I've ever seen a debt treated as an asset,” she said.

She gave an example of Chu, who acquired a property with an LRBA from a commercial bank on 1 July 2021, at age 56. Chu now has health issues and had to terminate employment on 1 April 2025 at the age of 60.

“He immediately gets a full-time sedentary position with another employer, but by terminating employment after age 60, Chu has met a condition of release with a nil cashing restriction,” Steed said.

“If we look at his portfolio at 30 June 2025, he's got $1,050,000 of cash and shares a property worth $1 million less a modest borrowing of $300,000, so his actual account balance is $1.75 million.”

However, she added that, since he ended his employment after turning 60, the outstanding loan of $300,000 must be added back, resulting in a total super balance of more than $2 million.

“If he was just looking at his account balance at $1.7 5 million, he would be eligible to make non-concessional contributions, but when we add back the LRBA, then his total super balance exceeds $2 million and he is not eligible for any non-concessional contributions,” Steed said.

Furthermore, she noted there is also an SMSF-specific condition of release relating to illegal early access.

“If we look at financial advice fees, we don't have any guidance from the tax office. If accountants don't charge a fee, then it's non-arm's length income, but since 2017, the corporations’ law was amended to say that all advice providers have to be an individual,” she said.

“In days gone by, my licensee used to be responsible, but now it's me as the individual adviser. And there's a legal view that you can't charge yourself for something you already know.

“If it's in my head, then I know it, and I can't unknow it, so if I was to charge myself an advice fee from my adviser's account, then it's likely to be considered illegal early access.”