SMSF Wind Up

Questions or further information

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• about how to use Cleardocs, contact the Cleardocs helpline on 1300 307 343.
• about legal issues, contact the Cleardocs helpline on 1300 307 343. If you need advice, we will arrange for you to speak with a lawyer at Maddocks. The firm provides a free legal helpline in relation to the documents Cleardocs provides. If you require other legal advice in relation to your particular circumstances, then this will be charged for.

• Can be used by an SMSF with or without a Cleardocs trust deed
• Easy-to-use question interface with help icons for guidance
• Pre-population of SMSF details from earlier Cleardocs orders — saving you time
• Includes copy function for address details — saving you typing
• Extensive online help and local phone support

When can an SMSF be wound up?

You will need to check your SMSF trust deed, but SMSF trustees can generally wind up a fund whenever they wish to do so. If your fund has an employer-sponsor, they may be able to direct the trustee to wind up the fund.

Common reasons for winding up an SMSF include situations where:

• there are no assets left in the fund;
• the SMSF's members no longer wish to manage their superannuation themselves;
• the fund has no members;
• the fund is no longer able to comply with superannuation law (e.g. the trustee and members wish to move permanently overseas); and/or
• the members' circumstances have changed (for example, matrimonial splits).

How is an SMSF wound up?

The process for winding up an SMSF is governed by superannuation law and the fund's trust deed. You will need to review the trust deed to check what is required.

Generally, the process for winding up an SMSF is as follows:

1. The trustee resolves to wind up the SMSF in accordance with the fund's trust deed.
2. The trustee notifies each member and employer of the winding up.
3. The trustee obtains the consent of the fund's members (and any other third parties whose consent is required to wind up the fund, such as the fund's employer-sponsor, if any);
4. The trustee ensures all activity statements are up to date, and all financial statements and accounts are prepared.
5. The trustee deals with all assets and member benefits as required by superannuation law and the fund's trust deed.
6. The trustee lodges a transfer balance account report (if required) with the ATO in the required form.
7. The trustee arranges for an audit to be conducted by the fund's auditor for the final income year of the fund.
8. The trustee arranges for the fund's final SMSF annual return to be prepared and lodged.
9. The trustee ensures that all tax lodgement and payment obligations are met.

The Cleardocs SMSF Wind Up product includes a useful guide setting out the steps to take, and the order in which they must be taken.

What must the trustee do with members' benefits when the SMSF is wound up?

This is governed by both superannuation law and the fund's trust deed. You will need to review the trust deed to check what is required.

As part of the winding up of the SMSF, the trustee will need to either:

• pay the benefits to any member who meets a 'condition of release'; or
• if the member does not meet a 'condition of release', or does not wish to access their benefits, roll over or transfer the benefits to another complying superannuation fund or retirement savings account (RSA).

'Conditions of release' are events which allow members to withdraw their superannuation benefits. The most common conditions of release are a person retiring or turning 65.

The payment of any benefit to a member must also be permitted by the fund's trust deed.

The Cleardocs SMSF Wind Up product includes a useful guide setting out the steps to take when dealing with the members' benefits, and the order in which they must be taken.

Can an SMSF be re-registered after it is wound up?

No. Once an SMSF is wound up, it can't be re-registered. Members would need to establish a new SMSF if they later decided that they wanted to return to an SMSF structure.

Given this, the fund's trustee should be careful about proceeding with winding up the fund — and obtain professional advice about the process.

If some of the members wish for the fund to continue, there may be a way to achieve this by restructuring the SMSF (e.g. by appointing new trustees or changing to a corporate trustee, or changing the membership of the fund).

Does the trustee have any obligations after the winding up has finished?

Yes. They have obligations to keep records, some for up to 10 years. These obligations continue to apply after the winding up.

The Cleardocs SMSF Wind Up product includes a useful guide to which records need to be kept, and for how long.

Is there a difference between a 'roll over' and a 'transfer' of a member's benefits?

Yes. Superannuation law uses two terms when referring to the process of transferring a member's benefits between superannuation entities: 'roll over' and 'transfer'.

Generally speaking:

• a roll over takes place when the benefit is already potentially payable to the member (e.g. the member has met a condition of release), but the member elects for the benefits to stay within the super system; and
• a transfer takes place when the benefit is not potentially payable to the member, and so must stay within the super system.

Both involve the benefits being transferred out of one superannuation entity (e.g. an SMSF) and into another (e.g. another complying fund). The trustee's obligations on the winding up of a fund are essentially the same — that is, to comply with superannuation law, the SMSF's trust deed and each member's wishes (provided these wishes comply with superannuation law and the trust deed).

In practice, people may refer to any transfer of super from one fund to another as a 'roll over'.