23 June 2022

If you have a self-managed super fund (SMSF), there are several different reasons why you may consider winding it up. 

People often start an SMSF with the intention of spending a fair amount of time managing their investments, but after a while they may find it’s more time-consuming, complex or costly than first thought. In other cases, a member of the SMSF may have died or become sick. 

If you’re in the position where you have an SMSF but would like to move your retirement savings to a profit-to-member industry fund, like Active Super, it’s important to follow the right steps when closing the fund. 

Steps to take

Winding up an SMSF can be complicated which is why trustees often seek advice from a financial planner or SMSF professional. There are usually numerous steps, some of which can be onerous.  

It’s important to wind up your fund correctly because if you don’t meet all your obligations you may incur penalties. 

To wind up the fund properly, here are some recommendations from the  Australian Taxation Office (ATO). 

  • Seek agreement from all parties: All members of the SMSF must agree to winding up the fund.
  • Sell the fund’s assets: If the fund has investments, including shares and property, they need to be sold or disposed of when the fund is wound up, with attention paid to super laws and the requirements of the deed.
  • Arrange payment documentation: If you’ve paid an income stream or benefits to members, you’ll need to lodge a Transfer Balance Account Report (TBAR) for the ATO and a potentially a pay-as-you-go summary if benefits were distributed to members or a deceased estate. 
  • Manage tax obligations: Ensure tax liabilities and invoices are paid as the fund cannot be wound up if there are outstanding debits or credits on the account balance. 
  • Rollover refunds: If you’ve received a refund it needs to be rolled over via SuperStream before the ABN is cancelled. Superstream is a data and payment standard used for digital transactions within the super industry.
  • Distribute benefits to members or new fund: Benefits should be distributed to members with enough money remaining to pay fees or tax costs. You can choose to roll over all or some of the benefits to a new fund. 
  • Arrange for an SMSF auditor: The auditor will have to conduct a final audit before the fund’s last return is submitted. 
  • Finalise annual returns: This includes advising the ATO in the final return that the fund is being wound up, answering relevant questions and awaiting the final SMSF supervisory levy. 
  • Tell people you’re shutting down: You’ll have to let third parties know, such as accountants, lawyers, administrators, employers and advisers that have dealt with the fund. 
  • Close the bank account: After getting official notice from the ATO that the fund is being wound up, you’re free to close the associated bank account. First make sure rollovers are completed, refunds have been processed and you’ve settled liabilities or bills you’re expecting. 
  • Comply with the trust deed.

More information can be found at the ATO website.

Rolling over benefits to a new fund

Once you’ve liquidated your SMSF assets, you can roll over your balances to a super fund, provided the ATO and the super fund are aware of your intentions.

Generally, you’ll need to fill out a Request to transfer whole balance of superannuation benefits between funds (NAT 71223) and a Rollover Benefits Statement (NAT 70944) which also has to go to the new fund.

Seek Advice

If you plan to close your SMSF and transfer the funds to Active Super, contact us on 1300 547 873 or make an appointment with a financial adviser to see how we can help.^

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