This short article discusses how to wind up an SMSF after the completion of final reporting and administrative requirements. Read now.
The winding-up of an SMSF is the process of paying out or rolling over of fund assets. The wind-up happens after the completion of final reporting and administrative requirements.
The SMSF trustee may wish to wind up their fund for many reasons:
- all/most members have left the fund due to death or rolling funds into another fund, etc.;
- insufficient or no assets remaining due to payment or rolling over of benefits, etc.;
- inability/unwillingness of the trustees to continue as trustees due to age, etc.; or
- moving overseas.
In some cases, particularly moving overseas, an alternate structure for the assets may be appropriate.
You may need to engage a professional (e.g. accountant or administrator) to undertake these tasks. However, you need to understand what is involved as the trustees are ultimately responsible.
There are steps in winding up an SMSF which are listed below. One important point to remember is to not close your bank account(s) until the ATO has confirmed that the fund has been wound up.
STEPS TO WIND UP AN SMSF
1. Read the trust deed
The trust deed may contain information about winding up your fund.
2. Prepare a set of interim accounts
Prepare a set of interim accounts to determine member balances. Remember to take into account any tax payable and/or refunds due. It is usual for your accountant/auditor to provide a fixed quote for final services so these can be included in the SMSFs liabilities and sufficient cash retained to make these and any other payments (e.g. tax and/or supervisory levy). Other costs may include the closing of trustee companies and the vesting of bare trusts if LRBA arrangements are paid out.
3. Rollover member benefits
All benefits must be rolled out per both the SIS Act and the trust deed, and you need to use SuperStream to facilitate the rollovers. You may need to wait until any tax refunds are paid before you can pay out all member benefits.
There are a few ways that rollovers can be initiated:
- through your my.gov account
- by completing rollover request forms provided by the receiving superfund and instructing them to initiate the Superstream rollover request
- by generating a Superstream request through your superfund’s accounting software – your accountant or super fund administrator should be able to help with this
4. Arrange for a final audit and the final SMSF annual return
Your SMSF needs to have a final SMSF audit done before you can lodge your final annual return. This return will include filling out the ‘wind up’ labels on the return and finalising any outstanding tax liabilities.
5. Receive confirmation from the ATO
If everything is done correctly, the ATO will send you a letter stating that they have cancelled your SMSFs ABN and closed your SMSF records on their system.
6. Close your SMSF Bank Account(s)
Once you have received the ATO confirmation that your fund has closed, you can close your SMSF bank accounts.
HOW BRISTAX CAN HELP YOU
There are multiple factors to consider when winding up an SMSF. Our expert SMSF Accountants would be happy to speak or meet with you to discuss your situation. We’ll take the time to understand your circumstances and provide advice that maximises your financial position.
This article is for general information only. It does not make recommendations nor does it provide advice to address your personal circumstances. To make an informed decision, always contact a registered tax professional.