Whilst the practical reality is that your accountant or SMSF administrator will take care of most of this for you, it is important that you are aware of and understand what is involved as your ultimately responsible.
There are a few reasons why trustees may wish to wind up their SMSF:
The death of a member.
Often this can be a catalyst for the remaining member(s) to decide that they do not wish to continue on with a SMSF, especially if the deceased member was the one who was the driving force behind the original establishment and ongoing management of the fund.
There are no assets left.
If over time, all the monies in your SMSF have been paid out either as a lump sum or as pension payments to members, then you need to wind up the fund.
Its just not for you anymore.
Trustees establish SMSFs for a variety of reasons, however for some people the ongoing paperwork and daily investment management becomes a hassle that they just don't want to have to deal with anymore. Similarly, trustees who have had poor results from their investment management sometimes decide its best to hand it back to a fund manager and rollover their superannuation into a retail or industry super fund. There is nothing wrong with this, and is a perfectly legitimate course of action.
You are moving overseas.
If your moving overseas, then depending on your length of absence, your SMSF may be in danger of failing the definition of being an Australian regulated superannuation fund. An alternative to winding up the Fund (if your returning to Australia) may be to appoint an 'approved trustee', which is basically a professional corporate trustee company. In this case your SMSF becomes what is known as a 'small APRA fund' and is regulated by APRA. On your return, you can then revert it back to a SMSF and take on the trusteeship again.
1. Notify the ATO
You need to notify the ATO in writing within 28 days of the fund being wound up, with the following details:
- the name and ABN of your SMSF
- the date your SMSF was wound up
- a contact person, with contact details such as name, phone number, email etc.
2. Either payout or rollover member benefits
The wind up of a SMSF means that there will be no assets left in in the fund. To move these assets out, you need to comply with both the SIS laws and your trust deed. This generally means paying out lump sums to members, provided they can satisfy a condition of release, or rolling over the members benefits to another complying superannuation fund (usually either a retail fund or industry fund). If you are rolling benefits over to another super fund, there are two ATO forms for completion:
- 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 fund, you need to 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
ETP payment summary – superannuation fund (NAT 2606).
A 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 so you can pay out benefits or roll over benefits to another fund, there may be capital gains tax issues.
3. Arrange for a final audit and the final SMSF annual return
Just as you have your SMSF audited each year, so it follows that when your winding up your fund, you will need to have a final audit done before you lodge your final annual return. This return will include filling out the 'wind up' labels on the return, and finalising any outstanding tax liabilities at that time.
4. Receive confirmation from the ATO that your SMSF has been would up
If everything has been done correctly, the ATO will send you a letter stating that they have cancelled your SMSFs ABN, and closed your SMSF records on their system.
5. Close your SMSF bank account(s)
Only AFTER you have received the ATO confirmation letter should you close your SMSF bank accounts. This is because any refund you may receive from the ATO may not be able to be banked otherwise.
The ATO also has a guide booklet for winding up a SMSF. You can download a softcopy in pdf from the link below:
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