It is imperative for trustees to ensure they have liquidated the assets of an SMSF they are winding up with consideration for any standard company procedures such as dividend distributions, a sector specialist has stressed.
Accurium senior SMSF educator Anthony Cullen pointed out this procedural acknowledgement is particularly important when a dividend reinvestment plan, rather than a cash payment, is involved.
“March and April is generally dividend season for most listed companies, but not all. Some listed companies pay their dividends in early July or early January,” Cullen told attendees of an Accurium technical workshop held recently.
“I’ve seen [situations] over the years where clients have made the decision to wind up their fund generally reasonably late in the financial year and so by the time they get around to disposing of their investments they’re already past the ex-dividend date.
“So they sell their shares in Company A, but they’re [still] on the books for owning the shares at the date that the dividends have been determined and on [say] 2 July all of a sudden [the SMSF will have] new shares that have been allocated to it as the dividend reinvestment.
“So that has the potential to throw the whole [wind-up] process out because we now have assets again [in the fund].”
According to Cullen, the same principle applies to future employer contributions and suggested communication to all relevant parties about the winding up of an SMSF should be done as early as possible.
“Another thing we see people get tripped up on is that they leave the notification in the trust of the member to go to their employer and saying ‘please stop paying my super contributions [to my SMSF as] I now need you to direct them to industry fund number one’ or whatever it might be,” he revealed.
He pointed out this often leads to an SMSF receiving an unwanted contribution at the time when the trustees want to have the fund discontinued.
Anthony Cullen will be presenting at the SMSF Professionals Day 2026. Click here to register and secure your seat at 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