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