Timing is everything!
The SMSF Timing Trap: Why Karen’s Home Deposit Cost Her a Pension Cut
Karen’s story is a classic example of how a simple, logical financial move can backfire due to administrative "lag." By moving her own money, Karen unintentionally triggered a "double-counting" of her assets that lasted months.
The Situation
Karen had a Self-Managed Superannuation Fund (SMSF). In August 2025, she decided to put a deposit down on what would one day be her new home. To fund the deposit, she withdrew the necessary amount from her SMSF.
On paper, this was a "net-zero" transaction:
SMSF Assets decreased.
Personal Assets (the home deposit) increased by the same amount.
In Karen’s eyes, her total assessable assets remained the same. Centrelink, however, saw it differently.
The Problem: The Reporting Lag
The issue lies in how SMSFs are valued. Centrelink generally updates SMSF asset values based on the fund’s annual financials and tax returns.
The Withdrawal: August 2025.
The Reporting Cycle: Karen’s accountant typically completes the SMSF tax returns in November each year for the previous financial year.
The Gap: Because the withdrawal happened in August 2025, it wouldn't be officially recorded by Centrelink until the financials were completed in November 2026—15 months later.
The Financial Hit
Karen was legally required to notify Centrelink of her new property deposit within 14 days. This meant:
Asset 1: Centrelink counted the deposit money held in her name.
Asset 2: Centrelink still counted that same money as being inside the SMSF because the fund hadn't "officially" updated its value.
The result? Karen was being assessed on the same money twice, leading to a significant and unnecessary reduction in her pension.
How This Could Have Been Avoided
To fix the mess, Karen had to pay her accountant to produce "interim financials"—an expensive and avoidable cost. Had Karen sought advice before August, the strategy would have looked like this:
Timing is Everything: We would have advised her to draw the funds prior to June 30 (the end of the financial year).
Fast-Tracked Paperwork: By arranging for the accountant to complete the 2025 financials as soon as July hit, the window for double-counting would have been minimized or eliminated entirely.
The Key Takeaway What looks like a simple transfer can have a "ripple effect" on your pension. A small change in timing can be the difference between a smooth transition and a very expensive accounting bill.
Disclaimer: This is a snapshot of one client’s experience. Financial rules are complex, and you should always seek professional advice tailored to your specific circumstances before making decisions regarding your SMSF or pension.