Mozo guides

An Introduction to SMSF term deposits

An SMSF term deposit is designed to help the members of a self managed super fund save money. In short, the SMSF can invest a sum for a fixed period of time, be it a few months or a few years, and build on that initial investment through a fixed interest rate. Just as is the case with a regular term deposit, interest can be paid monthly, quarterly or at the end of the term.

Bear in mind that only SMSF trustees can apply for an SMSF term deposit and some providers will also have a limit on the maximum number of trustees an SMSF customer can have. For example, an Authorised Deposit-taking Institution (ADI) may say that to open an SMSF term deposit with them you need to be a member of an SMSF of two to four trustees, or be a corporate trustee with no more than four directors. It’s always best to check the fine print on what is required by the provider. 

For now, let’s get into a bit more about how SMSF term deposits work.

How do SMSF term deposits work?

A SMSF term deposit works a lot like a standard term deposit where you keep your cash locked up for a set period at a fixed rate. Term deposits can be particularly useful when the cash rate is volatile and you’re looking for a secure and steady investment. Keep in mind that you can also miss out on the best term deposit rates if you don’t follow the market. 

Why allocate super to a term deposit?

Some of the reasons you may consider allocating super to a term deposit include:

  • Security and stability: Just like a standard term deposit, your SMSF term deposit is guaranteed up to $250,000 by the Australian Government in case your provider fails (which is very unlikely). 
  • Predictable income: Since a term deposit is set at a fixed rate and period, you’ll know exactly how much interest is paid over the life of the term. Unlike an investment vehicle such as shares, term deposits guarantee a fixed return. 
  • Lock in high interest rates: One of the biggest benefits of term deposits is that you can take advantage of good interest rates and lock into those for a set period of time. Just remember, if the interest offered on term deposits generally rises during your given term, you can’t capitalise this. You’re locked in. However, you are at an advantage if the economy becomes volatile or if interest rates drop.

What are the general requirements of SMSF term deposits?

SMSF term deposits have a few more requirements than your standard term deposit. On top of the standard documentation that is required for the term deposit, you should also make sure that you meet the following requirements:

  1. Alignment with trust deed: Make sure that term deposits are allowed by the SMSF trust deed.
  2. Sole purpose test: Confirm that term deposits are only for providing retirement benefits to members.
  3. Compliance with legislation: Adhere to superannuation laws and regulations governing SMSF investments.

What to look for in a SMSF term deposit?

Ultimately, the goal is to secure a term deposit that aligns with the SMSF's investment objectives, offers competitive returns, and provides peace of mind for trustees.

To do this, look out for features such as:

  • High interest rates
  • Low or no fees
  • Automatic rollover features
  • Choice of investment terms

SMSF term deposit account setup and investment process

Once you’ve selected the term deposit provider for your SMSF, you’ll need to get through the sign-up process. The trustee needs to provide documentation verifying the SMSF's identity and compliance with regulatory requirements. This may include the trust deed, ABN, and TFN for the SMSF. 

If approved, you can then open the term deposit account, specifying the investment amount, term length, and any other relevant details. Funds are then transferred from the SMSF's bank account to the term deposit, and the investment is confirmed, with interest accruing over the agreed upon term.

Monitoring and management

You can regularly review account statements provided by the financial institution to check up on your deposit. However, the performance and interest for a term deposit is predictable over the length that you’ve set it up for. 

One area you should keep aware of is when a term deposit nears maturity, you’ll be able to roll over the deposit into a new term. According to ASIC however, there's a good chance your new term deposit will have a lower interest rate than it did before. 

Typically your bank or financial institution will notify you just before your term deposit reaches maturity, however it’s important to set a reminder just in case. The government’s Moneysmart site suggests reviewing your term deposit one month before it matures so that you can decide whether to withdraw the money or reinvest into a new term deposit. While term deposits are fixed for a term, they shouldn't be seen as 'set and forget' investments.

Some providers may offer online portals or customer service assistance lines to help with this step of deciding on your next move. 

Also be sure to review the provider’s policy to see if there are other rules you need to follow. For example, you may need to give notice before you can access the funds. And in most cases, early withdrawal fees and penalties will apply. 

Term deposit selection

Not sure where to find a term deposit for your SMSF? You can head over to our business term deposit hub page or explore more of our superannuation guides. Alternatively, you can check out some of the providers in the tables below… 


Why do I need to provide details of all the trustees associated with my SMSF?

Providing details of all trustees associated with your SMSF is vital for compliance with regulatory standards, fulfilling legal obligations, enabling transparent decision-making, ensuring operational efficiency, and facilitating comprehensive reporting to regulatory authorities and auditors.

What interest rate will be applied on my term deposit?

The interest rate applied to your term deposit will depend on current market conditions (like the official cash rate), the length of the deposit term, whether your term deposit interest is paid monthly or at maturity, and any loyalty bonus that may apply when reinvesting with the same provider.

Are there any disadvantages to an SMSF term deposit?

Relationships can change in an SMSF and this can always impact your money. For example, your SMSF may be affected if there is a relationship breakdown between members, if a member dies, or loses their job, becomes ill, or if a member behaves dishonestly. Just like every financial move, you need to understand the rules of any term deposit and the timing of such an investment. 

Cameron Thomson
Cameron Thomson
Money writer

Cameron has a Bachelor of Creative Writing and History, and a background in broadcast media from his time at 2SER Radio. This diverse set of skills has informed his analytical yet creative approach to dissecting financial data and uncovering long-term trends in consumer finance. Cameron is RG146 certified for Generic Knowledge and keeps a keen eye on current and historical deposit and savings rates on the Mozo database. Cameron is also interested in tracking the investment space, particularly share trading platforms, to help Aussie consumers save and invest their money more wisely.