Summary: The real winners of falling interest rates are SMSFs with a variable rate LRBA and an offset account. Offset accounts are the most powerful savings accounts because they switch the equation from “earning” money at a low rate that is taxed to “saving” money at a higher rate that is untaxed. As interest rates fall, the benefit for SMSFs of an offset account attached to an LRBA is increasing.
Key take-out: The after-tax returns gained from an offset account are on average more than twice as good as earning interest.
Key beneficiaries: SMSF trustees and superannuation accountholders. Category: Superannuation.