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Winding Up a Self-Managed Super Fund

By August 25, 2017March 15th, 2019Retirement, Superannuation, Uncategorized

I am often asked, “What Do I Need To Do to Close the (choose your expletive) Down?). This is not a complicated process, though those with a vested interest (think those who set it up in the first place) may try to convince you that it is. Your self-managed superannuation fund may be a guaranteed recurring income stream for people such as accountants, auditors, lenders, property consultants, real estate agents or financial advisers, and as such they may try to convince you that the complication of closing your fund and doing something else with your super means that you’re better off just leaving it. The purpose of this article is to set out the simple steps to closing down a fund.

Full disclosure: I am on record as saying that in my view a significant number (way more than half) of self managed superannuation funds should not exist. I have actively closed more self-managed funds in the last few years than I have opened, and I have received considerable criticism from some of the aforementioned vested interests for doing so. I wrote a guide some time ago on things you should consider when assessing whether you really need to continue with your fund. You can receive a free copy here.

The basic principle to understand is that a fund only exists while it is holding assets for one or more members. In the simplest case of a single member fund, if that member decides to roll his assets out of the SMSF to another fund, upon the rollover being completed (which of course would require sale of all of the funds assets) the fund no longer exists. Of course, there might be transaction costs, and there may be liabilities to be paid out, but all of these would be reflected in the members’ balance.

The simple steps:

  1. Check your SMSF Trust Deed for any special requirements to wind up the fund (In my experience there are not usually any).
  2. Pay out or rollover all super (leaving a sufficient amount to pay final tax or expenses, including accountant and auditor, if required). You will need a Rollover Benefit Statement to achieve this, your fund accountant should be able to help with this.
  3. Arrange preparation of the final financial statements of the fund. Tread carefully, your accountant might not like what you are doing.
  4. Have your SMSF auditor complete the final audit.
  5. Complete and lodge the final SMSF annual return there is a box on the form to indicate that this is a final return
  6. Pay any outstanding tax and other expenses
  7. After all expected liabilities have been settled (there will likely be a small residual balance), roll this over to the members’ nominated new super accounts.

Care needs to be taken, but the process is not difficult, as always professional advice is recommended. Choose your adviser carefully, they may have the aforementioned vested interest, or they may not understand this stuff themselves, in my experience many don’t.

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