Financial advisers must have a set of procedures in place to facilitate the wind-up of an SMSF, according to an industry expert.
Speaking at last week’s Chartered Accountants Australia and New Zealand 2015 SMSF Day, Miller and Co Education principal Tim Miller told delegates it was just as important to have a process to wind up an SMSF as it was to have a process to establish one.
“If we’re setting up a self-managed super fund, we might set up one a month or one a week or whatever the number might be, we’d have some form of process to go through with our clients,” Miller said.
“So when we’re winding one up we’re going to have to come up with a [similar] process, depending on why we’re winding it up.”
He explained there were many factors that could lead to the wind-up of an SMSF and those would be the drivers of the process advisers needed to employ to facilitate that course of action.
“Are we winding it up because someone died? Are we winding it up because some family members don’t like each other anymore?” he said.
“All of these different themes will determine what our process is.”
He said the low number of SMSFs that had been dismantled to date had contributed to the lack of attention afforded to that type of event.
“The ATO average [of wind-ups per year] is just under 8300,” he pointed out.
“What that tells me when we look at the number of people who actually lodge returns, [around] 13,000, that on average we do less than one per year.
“So if we’re doing less than one per year, what is our process?”
He stressed it was imperative advisers developed the skill of identifying the elements influencing wind-ups to in order to effectively formulate a process to manage those situations.