Closing Your SMSF:
A Step-by-Step Guide
Closing a Self-Managed Super Fund (SMSF) is a complex process that requires careful planning, compliance, and reporting to the ATO.
Whether you’re retiring, simplifying your finances, or consolidating into a retail or industry fund, it’s essential to follow the correct steps to avoid penalties and ensure a smooth wind-up process.
At HelloLedger, we provide expert guidance to help SMSF trustees finalise obligations, distribute member benefits, and close the fund properly.
Why Close an SMSF?
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Retirement:
Members may decide to consolidate super into a larger industry or retail fund for simplicity.
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Cost Considerations:
Running an SMSF can become costly, especially if the balance is low or compliance requirements increase.
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Time and Administration Burden:
Trustees may no longer want the responsibility of managing the fund.
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No Remaining Members:
All members may have exited or passed away.
Key Steps to Wind Up Your SMSF
1. Review Your Trust Deed
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Check your fund’s trust deed for instructions on winding up the fund.
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Confirm any specific rules or procedures that must be followed.
2. Get Written Agreement from Trustees
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Hold a trustee meeting and ensure all trustees agree to wind up the SMSF.
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Record the decision in meeting minutes and have all trustees sign the agreement.
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Keep copies of the agreement and minutes with the fund’s records.
3. Dispose of Fund Assets
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Sell or transfer fund assets and document:
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Buyer details, sale date, and amount received.
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Valuations and decisions about how and when assets were sold.
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Calculate the entitlements of each member based on their balances.
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Assess capital gains tax (CGT) implications and prepare reports for the ATO.
4. Finalise Tax and Compliance Obligations
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Complete outstanding tax obligations, including:
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Transfer Balance Account Reports (TBAR).
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PAYG payment summaries for lump sums and income streams.
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PAYG withholding statements and reports.
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Submit all necessary lodgements to the ATO.
5. Pay Expenses and Tax Liabilities
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Pay off all final invoices, audit fees, and asset-related expenses.
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Settle any tax liabilities, including:
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PAYGI (Pay As You Go Instalments).
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PAYGW (Pay As You Go Withholding).
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6. Calculate and Distribute Member Benefits
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Calculate each member’s benefits based on their balance and entitlements.
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Pay benefits as either:
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Lump sum withdrawals—check the member has met a condition of release.
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Rollovers into another superannuation fund.
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Ensure the fund has enough liquidity to make payments and account for CGT implications.
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Verify whether the payments meet pension standards if the member was receiving a pension.
7. Roll Over Benefits (If Required)
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Validate TFNs via the SMSFmemberTICK service.
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Roll over to:
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Another SMSF—verify fund and member details using the SMSF Verification Service.
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APRA-regulated funds—verify fund details using the Fund Validation Service.
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Use SuperStream to process rollovers within 3 business days.
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For death benefit rollovers, lodge a Death Benefit Rollover Statement.
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Submit a TBAR for any rolled-over pensions.
8. Complete the Final SMSF Audit
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Arrange for an approved SMSF auditor to complete the final audit and any outstanding audits since the fund’s establishment.
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Ensure the auditor’s report is submitted with the final SMSF annual return.
9. Lodge the Final SMSF Annual Return (SAR)
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Lodge any outstanding returns for previous years.
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Submit the final SAR, marking the fund as wound up.
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Address any capital gains tax or refunds owed.
10. Notify Third Parties
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Advise all relevant third parties that the fund is being closed, including:
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ASIC, if required.
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Employers making contributions to the fund.
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Tax agents and financial professionals assisting with compliance.
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11. Close Bank Accounts and Cancel Registrations
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Close the fund’s bank accounts once all expenses are paid and refunds received.
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Cancel the fund’s ABN and TFN with the Australian Business Register (ABR).
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Notify the ATO and confirm the fund has been wound up.
Key Considerations When Closing an SMSF
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Timing of Closure:
Plan the timing to avoid incurring unnecessary costs or penalties for missed deadlines.
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Asset Sales and Transfer Costs:
Consider any capital gains tax (CGT) implications when selling assets.
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Documentation and Record Keeping:
Maintain SMSF records for at least 5 years after closure, as required by the ATO.
Closing Your Fund FAQs
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How long does it take to close an SMSF?
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The process can take weeks to months, depending on:
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- Asset sales timelines.
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- Audits and lodgements.
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- ATO processing times.
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Do I need to complete a final audit?
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Yes, an independent SMSF audit is required before submitting the final annual return to the ATO.
What happens if I owe taxes when closing the fund?
Outstanding tax liabilities must be paid in full before the fund can be finalised.
Can I reopen an SMSF after it’s closed?
No, once closed, an SMSF cannot be reopened. A new SMSF would need to be established.
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Can I roll over my SMSF balance into another fund?
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Yes, member balances can be rolled over to another SMSF or APRA fund using SuperStream.
What happens to assets that cannot be sold?
Assets must be transferred to another super fund or sold, with proper documentation provided.
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How long do I need to keep SMSF records after closing?
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Trustees must keep financial and compliance records for at least 5 years.
Can HelloLedger assist with closing my SMSF?
Yes, HelloLedger provides:
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Assistance with steps of closing your super fund including arranging the final audit with your Fund auditor, and final tax return lodgements.
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Support with SuperStream rollovers and transfer documentation.
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Help in completing ATO requirements.