Self Managed Super Fund

Winding up a Self Managed Super Fund

Winding up your Self Managed Super Fund

Winding up an Self Managed Super Fund involves dealing with all of the assets of the fund so that the fund has no assets left, and completing all the reporting and other administrative obligations as a trustee.

If you decide to wind up your Self Managed Super Fund, as a trustee, you have some responsibilities that you need to meet.

Why trustees wind up Self Managed Super Funds

Listed below are some common reasons why people wind up their Self Managed Super Funds.

• Self Managed Super Funds and the law surrounding Self Managed Super Funds is complex. Not everyone is ready for this when they establish a fund. To effectively manage your own super, you need the time and expertise. In the end, some people realise that having and managing their own fund is not for them so they decide to wind up their Self Managed Super Fund.
• If all the members and trustees have left the Self Managed Super Fund (for example, they may have died), the fund needs to be wound up.
• If all the benefits have been paid out of the fund, the fund needs to be wound up.
• Self Managed Super Fund trustees that intend to move overseas may consider winding up their Self Managed Super Fund because the fund needs to meet the definition of an 'Australian superannuation fund'. The decision to continue with a Self Managed Super Fund when you are not residing in Australia should be made very carefully.

In some cases, you'll be able to pay benefits to members when you wind up your Self Managed Super Fund. In other cases, the members won't be able to, or won't want to take their benefits so you will need to roll them over to another super fund.

Once the fund is wound up, it cannot be reactivated, unless the wind up was in error. In this case, all outstanding returns for the intervening period will need to be lodged.

What you need to do

If you have decided to wind up your Self Managed Super Fund there are some key activities that you need to do.

• Tell the Australian Taxation Office within 28 days of the fund being wound up.
• Deal with the member's benefits in accordance with the super laws and the trust deed - this may mean paying them an eligible termination payment, if they are entitled, or rolling their benefits to another fund (you may need to sell assets to do this).
• Have a final audit of the fund undertaken.
• Complete your reporting obligations with the tax office and pay any final liabilities.

There might also be other things that your trust deed requires you to do to wind up your fund.

Notify the Australian Taxation Office

You need to let the tax office know within 28 days of winding up the fund.
You need to do this in writing and include:

• The name of your Self Managed Super Fund
• The Australian Business Number (ABN) or Super Fund Number (SFN) of your Self Managed Super Fund
• A contact person, including their name, phone number and fax number
• The date you wound up your Self Managed Super Fund

Send your letter to the tax office to:

Australian Taxation Office
PO Box 3578
ALBURY NSW 2640

Deal with Member's Benefits

You need to ensure that:

• You deal with member's benefits according to the super law and the trust deed
• Your fund has no assets left once it has been wound up.

If you are winding up your fund and have not met a condition of release, you cannot access your super. Your super needs to be rolled over into another complying fund.

If you are moving your funds into another complying super fund, there are two forms you may be required to complete:

1. Request to transfer whole balance of superannuation benefits between funds (NAT 71223) - This form can be used by members to request the transfer of the whole of their benefits to another super fund.
2. Rollover benefits statement (NAT 70944) - As the trustee of your fund, you need to complete this form when you rollover benefits to another fund. You need to keep a copy and send a copy to the fund you've transferred the benefits to.

If your members are entitled to take their benefits as a lump sum payment you will need to complete the ETP Payment Summary - Superannuation Fund (NAT 2606).

If a pension or annuity payment was paid to a member and they had tax withheld, you will need to complete the PAYG payment summary  - superannuation income stream (NAT 70987)

If you issued a payment summary throughout the year you will also need to complete the PAYG payment summary statement (NAT 3447).

There may be capital gains tax implications on the disposal of assets when you are paying benefits or rolling over benefits to another fund.

Arrange a final audit of your fund

You are required to appoint an approved auditor to audit your fund each year. When you are winding up your fund, you still need to have an audit completed before you can lodge your annual return.

Complete your reporting responsibilities

If you wind up your SMSF you need to lodge your final SMSF annual return. You need to lodge the Self managed superannuation fund annual return (NAT 71226) for the 2007-08 income year and onwards. You need to complete all the wind up labels, including:

• Was the fund wound up during the income year?
• Date on which the fund was wound up
• Have all tax lodgment and payment obligations been met?

You also need to finalise payment of any outstanding tax liabilities at this time.

If you have any returns from previous years still outstanding, then you also need to complete them.

You need to receive confirmation from the Australian Taxation Office that the wind up of your fund has been finalised before closing your SMSF bank accounts. If you close your SMSF bank accounts prior to receiving confirmation from the ATO, any refund you may be entitled to cannot be banked.

Confirmation of your wound up fund

To confirm that you have met all of your tax responsibilities, the tax office will send you a letter stating that they have:

• Cancelled your Self Managed Super Fund's ABN
• Closed your Self Managed Super Fund's record on their systems.

It's important to wind up your fund correctly. If you have not lodged the required reports, it is likely the ATO compliance team will contact you to do so. If you fail to carry out these responsibilities, you may be selected for further compliance activities. You may also be subject to penalties.

Rogerson Kenny Business Accountants Melbourne can assist you with your accounting and auditing requirements. If you would like to appoint Rogerson Kenny Business Accountants as your approved auditor, or would like to discuss this topic further, click contact us or call us on (03) 9802 2533.

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