he process of winding up an SMSF is similar to closing down a company. An SMSF might be wound up because all the benefits may have been paid out of the Fund.
To wind up your SMSF you will need to notify the ATO within 28 days, lodge a final Annual Return and finalise any outstanding tax liabilities. On the first page of the tax return, tick the option advising the ATO that this is the final tax return of the Fund. When Superannuation Warehouse handles your SMSF, we will perform this function for a fee of $250.
Be careful:
- An SMSF which has never had assets, can’t be wound up – because it has never legally existed. All that is needed is to cancel the fund’s registration.
- The ATO gives guidance on how to close the Funds without assets QC 23331 – “Funds without assets”
Reasons why Trustees wind up SMSFs
For an SMSF with only one Member, paying out the balance to beneficiaries on the Member’s death means the end of the SMSF. Funds with more than one Member will continue unaffected.
If all the monies in the SMSF have been paid out to Members either as a lump sum or as pension payments, you will need to wind up the SMSF.
Trustees can decide to move their member balance back to a retail superannuation fund. When doing so all assets need to be converted to cash and transferred to the next fund. There is nothing wrong with this, it is a perfectly legitimate course of action.
If one or more of the Trustees move overseas then, depending on their length of absence, your fund may be in danger of losing its status as a resident fund. In this case, the most cost efficient option is to move funds to a retails superannuation fund and close down the SMSF.
What you need to do to close an SMSF:
We will close down the Fund with the ATO and have the ABN cancelled once the final return is lodged.
Trustees need to arrange for all investments to be sold and for the money to be deposited into the SMSF bank account. Subject to the member’s age and preservation components, this can be paid out as an in-specie lump sum to the member. Please transfer the accountancy fee for the current year to date to Superannuation Warehouse – we will send you an invoice for this.
- Contributions made to the Fund for the current financial year and the contribution type (if any) for each member.
- Rollovers made to the Fund for the current financial year for each member.
- Withdrawals from the Fund for the current financial year for each member.
- Bank transactions details for all your bank accounts held by the fund until the closure date.
Winding up of an SMSF means that there will be no assets left in the SMSF. To move these assets out means paying out lump sums to members – provided they satisfy a condition of release – or rolling over the members’ benefits to another complying superannuation fund (usually a retail fund or an industry fund). If you are rolling benefits over to another super fund, there are two ATO forms to complete:
- Request to transfer whole balance of superannuation benefits between funds (NAT 71223)
Members of your SMSF use this form to request the transfer of the whole of their benefits to another super fund. - Rollover benefits statement (NAT 70944)
When you rollover benefits to another superannuation fund complete this form as a trustee. You keep a copy, and send a copy to the super fund that funds are being transferred to.
If any members are eligible (and have received) their benefits as a lump sum payment, you will need to complete the form, PAYG payment summary – superannuation fund (NAT 70947). - PAYG payment summary – superannuation income stream (NAT 70987) needs to be completed if a pension or annuity payment was paid to a member and tax was withheld.
- A PAYG payment summary statement (NAT 3447) will need to be completed if you issued a payment summary throughout the year.
Note also that where you are selling assets in order to pay out benefits or roll over benefits to another fund, there may be capital gains tax issues. Once we have this information we will prepare a Rollover Benefit Statement for each Member.
In the same way that your SMSF must be audited each year, it will also need to undergo a final audit when it is wound up, and before you lodge your final annual return. Completing the final return will include filling out the ‘wind up’ labels and finalising any outstanding tax liabilities.
If everything has been done correctly, the ATO will send you a letter stating that they have cancelled the ABN and closed your SMSF records on their system.
Don’t close your SMSF bank account until you have received the ATO confirmation letter, otherwise you may not be able to bank any refund you may receive.
For more guidance on the steps involved in closing down an SMSF, see the ATO guidance here:
When Superannuation Warehouse do a final set of accounts and Member statements for your SMSF, we will prepare the Member Roll-over Statement you can send to the receiving superannuation fund. Alternatively, you can complete this manually by downloading a roll-over form.
