To wind up a SMSF you need to:
- Refer to your SMSF Trust deed as it may contain vital information about winding up your fund.
- Notify the ATO within 28 days
- Deal with all the assets of the fund
- Arrange a final audit
- Complete your reporting responsibilities including lodging your SMSF annual return and finalising any outstanding tax liabilities.
Why would you need to wind up a SMSF
There are a number of reasons why you might need to wind up your SMSF:
- All the members and trustees may have left the SMSF
- All the benefits may have been paid out of the fund
- Relationship breakdown
- The fund may no longer meet the definition of an Australian Superannuation fund because the trustees have moved overseas permanently
- You may have found that running an SMSF is not in your best interests
- The trustees’ circumstances may have changed in a way that affects their capacity to effectively manage their fund.
- There may be insufficient balance of funds in the SMSF to meet the ongoing costs of operating the SMSF.
Options available to pay out the benefits
To pay benefits to a member when you wind up your SMSF, a condition of release must be met to allow them access to their benefits. If the member does not meet a condition of release or does not want to access their benefits at the time the funds winds up, the benefits must be rolled over to another complying super fund.
Assuming a condition of release has been met, there is the option of an in specie transfer of assets to the member. This is particularly useful if the timing is not right to sell the assets in the SMSF. (This includes when a managed fund puts a stop on trading due to a financial crisis). There are various tax consequences of paying out benefits both as cash and in specie so you should always seek advice before proceeding.
Accountants Beenleigh, Accountants Nerang