SMSF Wind Up

SMSF Wind Up

SMSF Wind Up

Eventually the time comes for all Super Funds to be wound up and the monies either withdrawn as a pension or rolled into a different fund. There are multiple reasons which cause trustees to decide to complete an SMSF Wind Up including:

  • The death of a trustee.
  • A major health event, such as disability or illness, resulting in the trustees being incapable or unwilling to continue running the fund.
  • The fund has paid out too much in pensions or other payments to be worth keeping the fund open given the ongoing costs.
  • All members decide to leave the fund which is often the case during a divorce or when the trustees are leaving the country.

The SMSF Wind Up is the natural end to all self managed super funds and should be planned for as part of your succession and estate plans. These plans should be committed to writing and signed by all trustees. As part of this process, you should chat with your estate lawyer about ensuring an enduring power of attorney is in place in case you reach the position where you are unable to manage the exit process.

As part of updating your investment strategy each year the trustees should continuously review whether the SMSF is still the right structure for them. If you need any help with this determination, we recommend speaking with an ASIC licenced financial planner who can provide holistic advice about your super and other assets along with retirement planning.

The Wind Up Process

As a rough guide the following steps should be undertaken as part of the process:

  • Review your SMSF Deed and check for any specific requirements it includes as part of the wind up process.
  • Organise a meeting of the trustees and document the decision to wind up the fund and the timeframe which you are working towards. You need to ensure this decision is signed off by all the trustees.
  • Where possible dispose of all assets of the fund while meeting the requirements under the Superannuation Industry (Supervision) Act 1993.
  • Finalise the ATO lodgments of the fund including TBAR reporting and PAYG payment summaries for the members. You should pay all outstanding ATO liabilities along with other expenses of the fund so you are in a position to close the fund bank account.
  • If applicable, ensure that all members’ employers have the details of the new super fund so no further contributions are made to the SMSF during the wind up process.
  • Complete the rollover of any remaining funds using SuperStream or alternatively look at a lump sum pension payment as appropriate.
  • Organise the shutdown of the Corporate Trustee company paying the ASIC shutdown fees and lodging the appropriate paperwork to finalise the company deregistration.
  • Once you have completed the wind up of the SMSF it cannot be reactivated and if you choose to renter the SMSF sphere again in the future you will need to proceed with a brand new SMSF Setup from scratch.

Keep in mind this is only a high level overview and depending on your specific situation there may be other steps involved in the shutdown of your SMSF.

Pensions & Lump Sums

If you are holding illiquid investments within the fund and you have reached preservation age, then you can look to move them via a market transfer as an in-specie pension or lump sum payment. This can be advantageous as you don’t have to convert the asset back to cash in order to pay it out of the fund. This is more complicated, and generally more expensive, than just selling the assets and distributing the cash but in circumstances where there is not a ready market such as unlisted shares this in-specie distribution can be appealing.

Rollovers

If you decide that the SMSF structure is no longer right for you, but you are not yet at preservation age then you can roll the funds over into an industry or other non-self-managed option. This can only occur once the fund has sold its investments and moved the assets back to a cash position. From there, we prepare a final SMSF Tax Return, organise a final SMSF Audit for the current income year and then pay any final tax and expenses from the fund prior to paying the money across into the new fund you have setup and then closing the SMSF bank account.

SMSF Wind Up Costs

There are generally quite a few additional costs during the wind up process on top of the standard accounting fees for the partial final financial year. As a rule, we suggest budgeting an extra $1,000+GST (payable via the fund) to pay for the additional accounting work involved in shutting down a self managed super fund. This covers the extra reporting to the ATO to cancel the TFN and ABN, as well as preparing the final rollover documents.

Do you want to learn more about our SMSF Services?

Give us a call on 1300 392 544 or get in touch online.

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If you’re interested in learning more about how we can assist with your SMSF wind up please reach out for a confidential quote. Simply submit your details and one of our friendly team will be in touch as soon as possible.

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Do you want to learn more about our SMSF Services?

Give us a call on 1300 392 544 or fill in the form above

Contact Us

If you’re interested in learning more about how we can assist with your SMSF wind up please reach out for a confidential quote. Simply submit your details and one of our friendly team will be in touch as soon as possible.

Contact Us Mobile

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