How do you close an SMSF?

By David Baruffi, Director

Traditionally self-managed super funds were established so that the trustees/members had greater control of their investment strategy and the diversity of investment assets to invest in. Fees were lower and there was pension flexibility.

Today, however, the increased obligations of the trustee are making SMSFs less attractive, particularly for older trustees who may no longer want the responsibility or stress of running an SMSF.

Tips and considerations before winding up an SMSF:

It is always wise to seek professional advice to assist the winding up process.

  1. Trust Deed – the first step is to check the trust deed to ascertain the requirements regarding the wind-up process.
  2. Written agreement – make sure that all trustees/members of the fund are in agreement regarding the wind up. Obtain written agreements and make sure they are tabled in a Minute.
  3. Again, obtain written agreement as to how the members would like their account balances rolled over or paid out as a lump sum, if normal conditions of release apply.
  4. Once the tax return obligations have been met, an audit has been conducted and all tax obligations have been finalized and paid, the ATO needs to be notified.
  5. Notifying the ATO must be in writing within 28 days of the fund being wound up.

ATO forms to be completed:

Depending on where the members’ account balances are to be distributed, the following ATO forms should be completed:

  1. Request to transfer whole balance of superannuation between funds (NAT 71223)
  2. Rollover Benefit Statement (NAT 70944)
  3. Lump Sum Payment (if member meets the condition of release) – ETP Payment Summary – superannuation fund (NAT 2606)
  4. A PAYG payment summary – superannuation income stream (NAT 70987) if a pension payment was paid to a member and tax was withheld.

Once the ATO has confirmed the SMSF has been wound up:

  1. Close the bank account, making sure any tax refunds have been paid into the account, all expenses have been paid.
  2. Cancel ABN.

All the steps take time, especially if there are assets in the SMSF that require selling and unless all tasks are completed, you may have to complete another year’s tax return.

We recommend that you obtain professional help in winding up your SMSF. Please contact our team for more information.

David Baruffi is an authorised representative and credit representative of AMP Financial Planning. Blueprint Planning Pty Ltd (ABN 78 097 264 554), trading as Blueprint Wealth, is an authorised representative and credit representative of AMP Financial Planning, Australian Financial Services Licensee and Australian Credit Licensee (AFSL / ACL 232 706).

This article contains information that is general in nature. It does not take into account the objectives, financial situation or needs of any particular person. You need to consider your financial situation and needs before making any decisions based on this information.

If you decide to purchase or vary a financial product, your financial adviser, AMP Financial Planning Pty Ltd and other companies within the AMP Group may receive fees and other benefits. The fees will be a dollar amount and/ or a percentage of either the premium you pay or the value of your investment. Please contact Blueprint Wealth on (08) 9423 0300 if you want more information.