Published 29 August 2018
Winding up a Self Managed Superannuation Fund (SMSF) is the process of closing the fund down. There are a variety of reasons why people choose to close down an SMSF. Some reasons include:
- Relationship breakdowns (this can include siblings fighting, etc)
- There are no assets left
- Lack of time to run the fund anymore
Sometimes when people divorce one of the parties does not feel confident to continue to manage a fund all on their own. They may not have been the one who normally handled the day to day running of the fund or understand what they are supposed to do as trustee. With the right support you may discover that you can operate a fund and even enjoy it.
Other times it is the right decision to wind up your fund. However, winding up a fund can be a complex process. You need to ensure that the fund is closed down in a way to minimise the costs and in the best manner to protect the members superannuation savings. You need to have a clear exit strategy.
There can also be tax consequences. To wind up your fund there must be no assets left. This may involve selling the assets in the fund. These assets could include property or shares. You need to consider any potential Capital Gains Tax (CGT) consequences of such disposals and the long term effect on members retirement savings.
The steps involved in winding up a fund include:
- Check the trust deed of the fund for what it says about winding up the fund
- Notifying the ATO within 28 days of the winding up of the fund
- Pay any outstanding expenses and income tax
- Rollover members benefits or payout benefits (if allowed)
- Organise for the final audit of the fund
- Lodge any outstanding income tax returns
- Lodge the final income tax return
- Lodge any outstanding business activity statements
- Close the bank account (once all expenses have been paid and refund received)
You will receive written notification from the Australian Taxation Office that the ABN (Australian Business Number) of the fund has been cancelled.
It is really important that your fund is closed down correctly. Otherwise, as a trustee you can be subject to penalties.
You also need to retain your superannuation records for several years – even after winding up the fund.
It is best to have a professionally licensed accountant guide you through the process. If you have any questions or need help winding up your super fund feel free to contact us.