How to wind up your SMSF

If you’ve decided it’s time to wind up your self-managed super fund (SMSF) then you may be wondering where to start. It can be a complex process, with a lot of paperwork, possible tax implications and the choice of what option will suit the next stage of your life.

People opt-out of their SMSFs and wind them up for many reasons - it may be taking up too much time, costing too much in administration fees, performing poorly, or the investment strategy is no longer appropriate.  

Whatever your reason, consider getting professional advice and assistance, including financial advice, and tax advice about selling your SMSF assets.

Rolling your SMSF into a new super fund

Once all members of your SMSF have decided to wind up your fund there are various steps to take outlined by the ATO (see below), and it’s important to know that once a fund is wound up, you can’t reactivate it. The trust deed (legal document) of the SMSF may also list the requirements that need to be followed when winding up the fund.

Once you’ve sold all the assets of your SMSF you’ll need to decide what to do with your super. A financial adviser can assist with your personal situation, and highlight some appropriate options. For example, an adviser may recommend rolling over your super to a licensed super fund that takes care of running your account, and if you’re retired or approaching retirement they may suggest an account based pension as one option.   

 

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There are a number of fee-for-service options offered by specialist accountants or financial advisers to help you with SMSF wind up activities. Fees may range depending on the complexity of the SMSF’s obligations and wind up requirements.

 

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Winding up your SMSF

  • To wind up your fund, the ATO outline the following things you need to do:
  • complete any requirements that the trust deed specifies about winding up the fund
  • pay out or rollover all super (leaving a sufficient amount to pay final tax or expenses if required)
  • appoint an SMSF auditor to complete the final audit
  • complete and lodge the final SMSF annual return (including wind up details)
  • pay any outstanding tax
  • after all expected liabilities have been settled and requested refunds are received, close the fund’s bank account

There may be other steps that your advisor thinks are relevant, based on your circumstances. The ATO also suggest you do not close your bank accounts until all expected final liabilities have been settled and any refunds are received.

The ATO will let you know when it cancels the SMSF ABN, and if the trustee is a company, you may consider if you want to wind the company up as well. Remember that any SMSF records will need to be kept for as long as the law requires.

 

FIND OUT MORE: WINDING UP A SELF-MANAGED SUPER FUND - ATO.GOV.AU

 

Opening an account based pension after winding up your SMSF

If you have multiple super accounts that you want to consolidate, or are selling your SMSF down in stages, consider rolling your funds into one main super account before opening an account based pension. It’s important to have a super account in place before you start your account based pension, because you can’t add to a pension account once it has commenced.

 

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Seek financial advice 

Winding up an SMSF can be complex, given the amount of paperwork and tax implications involved. Before proceeding you should consider getting professional advice as the steps required for each SMSF and the potential impacts will vary, depending on the trust deed and particular structure of the SMSF, its financial situation and many other factors unique to your circumstances.

If you’re interested in closing your SMSF, or if you’d like to speak to someone about the process, contact an AustralianSuper registered financial adviser.*

 

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* The financial advice you receive will be provided under the Australian Financial Services licence held by a third party and not by AustralianSuper and is not the responsibility of AustralianSuper.

This information is general financial advice which doesn’t take into account your personal objectives, situation or needs. Before making a decision about AustralianSuper, you should think about your financial requirements and refer to the relevant Product Disclosure Statement. AustralianSuper Pty Ltd ABN 94 006 457 987, AFSL 233788, Trustee of AustralianSuper ABN 65 714 394 898. 

Investment returns are not guaranteed. Past performance is not a reliable indicator of future returns.

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