A leading sector stakeholder has confirmed SMSFs earmarked to be wound up often have multiple years of outstanding annual returns and has identified aspects of key-person risk as to why this compliance issue continues to present an impediment to the process.
Heffron head of education and content Lyn Formica revealed the experience of the organisation’s wind-up service has shown the average SMSF set to be closed has on average three outstanding annual returns.
“So what is getting in the way [here]?” Formica asked Heffron senior SMSF specialist Annie Dawson during a session at the Heffron Super Intensive Day 2025 held in Sydney recently.
Dawson replied: “Key decision makers dying is one of the reasons. So the key person passes away and the other family members and the like really just don’t know what’s going on. They don’t have a great understanding of the requirements to get things done, [such as] finding information and revealing transactions, and it all just understandably gets put in the too-hard basket.
“Often they struggle with investment information being unavailable. So it could be, again, that key decision makers are not with us anymore.”
According to Dawson, key-person risk also plays a part in stymieing SMSF wind-ups from a different perspective.
“Sometimes everyone is alive and well in the SMSF itself, but they might have a bit of an exotic investment, maybe in an unlisted company, and they used to have a ‘go-to’ person and maybe that person isn’t on the scene anymore,” she pointed out.
“And that all gets a little bit too hard and emails go unanswered and another year rolls over and [again] it all gets a bit too hard.
“[It can come down to] not knowing what to do or [the trustees] not liking what [they] have been told to do, as to how to proceed, will also put the brakes on [an SMSF wind-up].
“And then we have some clients who [are hampered] due to ill health.”
