A senior SMSF stakeholder has noted trustees must sometimes consider a path of action that will lead to fewer costs and less trouble when having to liquidate a particular asset in light of a fund wind-up.
Accurium senior SMSF educator Anthony Cullen noted this would potentially be the case when a term deposit has yet to reach maturity, but the trustees are wanting to wind up the fund as soon as they can – a dilemma he is seeing arise more often.
“[In these situations] you’ve got two choices. You leave the term deposit going until [maturity], which means you’ve still got an asset and you can’t wind the fund up [until then], or you break the term deposit,” Cullen told attendees of a technical webinar held last week.
“[Then we’re told] but there will be fees associated with that. Well that’s the trade-off. Do you want to incur the cost of breaking the term deposit or do you want to incur the cost of having another year’s worth of accounts to be prepared, another year of audit and another year’s supervisory levy?
“What is the greater of two evils? What is more favourable of those two evils that you want?”
According to Cullen, this situation highlights the reason why a degree of longer-term planning is required when winding up an SMSF.
“If you’re not quite sure whether you want the fund to run into another financial year, then don’t roll over the term deposit or maybe roll it over for a shorter time period so it still matures before 30 June,” he suggested.
He pointed out there is a further issue to consider regarding the operating policies of banks.
“The other thing to think about, back in 2015 to help banks protect their cash-flow and liquidity requirements, is that there are rules now [meaning] banks don’t have to let you break a term deposit within the last 31 days [of its] existence,” he said.
“So if you’ve got a term deposit that is going to mature in early July, for example, and your client makes the decision they want to wind the fund up in June and they [tell] the bank they want to break the term deposit, the bank may turn around and say: ‘Sorry, we’re not going to that.’
“Once again, getting involved in the process earlier [will help].”
Anthony Cullen will be hosting a strategy session at the SMSF Professionals Day 2026. Click here to register for the event.
Darin Tyson-Chan
Editor
Darin is the founder and publisher of Benchmark Media, an independent publishing house whose mastheads include financialobserver, selfmanagedsuper and smstrusteenews. He has been covering the financial services space for over a decade and in this time he has worked for a variety of trade publications. Darin has also written for the Money section published in The Sydney Morning Herald and The Age.
Articles by Darin