Eventually the time comes for all Super Funds to be wound up and the monies either withdrawn as a pension or rolled into a different fund.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 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.
As a rough guide the following steps should be undertaken as part of the process:
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.
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.
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.
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 $1,500+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.
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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