ATO releases SMSF wind-up guide

ATO SMSF guide

The ATO has released a guide to assist SMSF trustees in winding up their funds and is encouraging them to plan ahead for this event.

The ATO has released a guide for SMSF trustees on how and when to wind up their funds, noting that even if they are not ready to do so, an exit plan should be in place to cater for a change in the circumstances of members or the fund’s ability to meet its retirement goals.

The guide, “Winding up a self-managed super fund”, available as a PDF download from the ATO, covers considerations that should go into an exit plan, the obligations on trustees and members when winding up a fund and the process that should be undertaken to ensure it is done correctly.

The guide recommended SMSF trustees should consider what they will do if a fund is no longer the right superannuation vehicle for them, adding “you may benefit from having SMSF professional advice during exit planning and winding up”.

In this regard, it named tax agents and accountants, financial advisers, fund administrators, legal practitioners, actuaries and SMSF auditors as each being able to provide input into the winding-up process, with SMSF auditors being named as the only professionals whose use will be mandatory in that process.

The guide, however, noted: “Even if you use a professional to help wind up your fund, responsibility for the fund still rests with you. All trustees share responsibility equally.”

It stated an exit plan should consider how a fund member’s death benefits will be dealt with, the appointment of an enduring power of attorney, estimated costs of winding up, the liquidity of the fund’s assets, being SuperStream ready to enable the roll out of benefits and where copies of the fund’s records and transactions will be kept after its closure.

Trustees were also encouraged to follow the process as mapped out in the guide and not close a fund prematurely.

“Once a fund is wound up, it can’t be reactivated. By completing and lodging your final SMSF annual return, you have informed us that the fund is winding up,” the ATO stated.

“Don’t cancel the fund’s ABN (Australian business number). Once we have processed your annual return we will confirm your fund has been wound up by sending you a letter stating we have cancelled the fund’s ABN and closed your SMSF records on our system.”

The guide is the second to be issued by the ATO following the release in December 2021 of the first of three guides, which covered the establishment of an SMSF.

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