Winding up your SMSF is the final stage of running your SMSF. It requires dealing with all of the SMSF's assets so that none remain, and completing all of the reporting and other administrative obligations as a Trustee.
In order to wind up your SMSF, Trustees must make sure that:
- All Trustees agree with the wind-up decision.
- Members' benefits have been transferred from the SMSF, either to a personal bank account (if the Member meets a condition of release) or rolled over to another complying Superfund before 30 June.
- Your SMSF has no assets left once it has been wound up.
- All outstanding SMSF annual returns and the final return are completed and lodged with the Australian Taxation Office (ATO).
Factors to consider while winding up an SMSF:
- ESUPERFUND charges a one-off payment of to wind up an SMSF. The Wind-up Fee is payable in addition to the ESUPERFUND Annual Compliance Fee for attending to your SMSF's Final-Year Compliance Requirements.
- To allow ESUPERFUND sufficient time for processing, it is highly recommended that you plan ahead and submit Applications before 31 May of the Financial Year. Applications submitted after 01 June might not be accepted.
- In-specie transfer out of non-cash assets held by SMSF during the wind-up process is not supported by ESUPERFUND. The complexity involved is outside the scope of our offering. ESUPERFUND only processes SMSF wind-up if Members' Super Benefits are transferred in cash.
- Once your SMSF is wound up and the SMSF ABN has been cancelled by the ATO, it cannot be reactivated.
- There may be Capital Gains Tax (CGT) implications for your SMSF on the disposal of assets. For example, any unused Capital Losses of the SMSF will be trapped within the Trust Structure of the SMSF and cannot be transferred or distributed out of the SMSF.
- We recommend that you seek professional advice from a financial adviser. A licensed financial adviser will consider your personal situation and make a recommendation suitable to your financial needs. ESUPERFUND is a no advice model and does not provide financial advice to clients.
The process to wind up your SMSF is detailed below:
Section 1: Prepare for Wind-up
Step1:
Convert all the SMSF assets to cash
To enable the transfer of Super Benefits from the SMSF, all the assets of the SMSF must be converted to cash and all proceeds should be deposited into your SMSF bank account.
If your SMSF holds suspended / delisted shares that cannot be disposed of on the open market, the SMSF may dispose of these shares using an off-market transfer to another party. For the disposal / transfer of the suspended / delisted shares, please contact the share registry or the company holding these shares directly.
Step2:
Cancel insurance policy held by the SMSF if applicable
If your SMSF still pays insurance premiums, please contact the insurance company to cancel the insurance policy and stop paying new insurance premiums from the SMSF bank account.
Step3:
Redirect employer contributions to another Superfund if applicable
If your SMSF still receives employer contributions, please require the employer to redirect future contributions to another Superfund and stop making new employer contributions into the SMSF bank account.
Step4:
Finalise Annual Compliance Requirements for the prior Financial Year if applicable
If your SMSF is required to lodge a Tax Return for the prior Financial Year, you will be required to submit an Online Checklist via your ESUPERFUND Client Portal. The Annual Checklist details the information we have for your SMSF and also advises what additional information is required from you.
On receipt of the Annual Checklist Information from you, ESUPERFUND will attend to the Annual Compliance Requirements. After we have completed the Annual Compliance Documentation for your SMSF, you will be notified to review and sign the Compliance Documentation. For more information on the Annual Compliance Process, please click here.
If your SMSF is not required to lodge a Tax Return for the prior Financial Year, then you may skip this step.
Step5:
Choose the distribution method of Members' Super Benefits
Members' Super Benefits must be transferred from the SMSF, either to a personal bank account (if the Member meets a condition of release) or rolled over to another complying Superfund.
Option One: Withdraw to a personal bank account
Once you are aged over 65 or aged between Preservation Age and 64 and "Retired", you can access your Super Benefits by making personal withdrawals. If you are under Preservation Age, you need to meet a special condition of release. For more information regarding early access, please click here.
Option Two: Roll out to another complying Superfund
If you do not meet a condition of release, your Super Benefits will need to be rolled out from the SMSF to another complying Superfund upon winding up the SMSF.
Section 2: Apply for Wind-up and Distribute Super Benefits prior to 30 June
Step6:
Submit a Wind-up Application
Once you have completed Section 1: Prepare for Wind-up detailed above, please notify ESUPERFUND of your decision to wind up your SMSF via the Client Portal Inbox. Please select "My SMSF Details (Including Fees)"; and then “Wind Up & Rollout” when you create a new query.
The information required by ESUPERFUND is different depending on whether Members choose to withdraw all Super Benefits to personal bank accounts or roll out to another Superfund.
- If all Members choose to withdraw the Super Benefits (subject to meeting a condition of release), please click here for the information to be included in your Wind-up application.
- If at least one Member needs to rollover Super Benefits from the SMSF to another Superfund, please click here for the information to be included in your Wind-up application.
SPECIAL NOTE: Please be advised that each Member of the SMSF has a proportional interest in the SMSF based on the contributions and rollovers made to the SMSF and any withdrawals made from the SMSF. If the Super Benefits within the SMSF need to be reallocated upon winding up, you will need to provide a copy of the associated legal documentation (i.e. Consent Order / Binding Financial Agreement) specifying the benefits allocation within the superannuation fund.
Step7:
Pay the Fees
• One-off Wind-up Fee
ESUPERFUND charges to wind up an SMSF in addition to the standard Annual Fee. This Wind-up Fee covers the additional administrative tasks required to close down your SMSF, including:
- Estimating your member balance for roll-out as of a specific date if applicable.
- Estimating the Financial Year's income tax, especially if the Tax Return has not yet been finalised if applicable.
- Processing the roll-out electronically via Superstream if applicable.
- Providing compliance and administrative advice throughout the wind-up and roll-out process.
We will instruct you to pay the Wind-up Fee to our office via Electronic Funds Transfer (EFT) upon receipt of your wind-up application.
• ESUPERFUND Annual Fee for the current Financial Year if applicable
The ESUPERFUND Annual Compliance Fee for attending to your SMSF's final-year Compliance Requirements is payable.
If your wind-up application is received before ESUPERFUND processes the Annual Fee on 15 January, we will instruct you to pay the Annual Fee for the final Financial Year to our office via Electronic Funds Transfer (EFT) upon the receipt of your wind-up application.
If your wind-up application is received after ESUPERFUND has already processed the Annual Fee on 15 January, then you may skip this requirement.
• Any other Fees payable if applicable
If your SMSF has any other Fees payable (e.g. ESUPERFUND Annual Fee for prior Financial Years, ATO Liabilities, Actuarial Certificate Fee), we will instruct you to pay before we can proceed to the next step.
Step8:
Distribute Super Benefits prior to 30 June
The distribution process of Super Benefits is different depending on whether Members choose to withdraw all Super Benefits to personal bank accounts or roll out to another Superfund.
- If all Members choose to withdraw the Super Benefits (subject to meeting a condition of release), you need to transfer funds from the SMSF bank account to a personal bank account. For the detailed procedure, please click here.
- If at least one Member needs to rollover Super Benefits from the SMSF to another Superfund, you need to comply with the SuperStream Standard and transfer the Super Benefits to the next Superfund via Electronic Funds Transfer (EFT). For the detailed procedure, please click here.
Please note that all Super Benefits in the SMSF bank accounts need to be distributed prior to 30 June. If you fail to withdraw / roll out all the SMSF Members' Super Benefits by 30 June, your SMSF's wind-up application might be cancelled, and you will have to lodge a normal Tax Return with the ATO.
IMPORTANT NOTE: You must keep the SMSF bank account open even if all Super Benefits have been withdrawn / rolled out.
Section 3: Complete and Lodge a final Tax Return and Audit
Step9:
ESUPERFUND prepares the final Tax Return and Audit for your SMSF
The Australian Taxation Office (ATO) only accepts the electronic lodgement of Tax Returns after the end of the Financial Year – that is, after 30 June.
In order for ESUPERFUND to prepare the final Tax Return and Audit for your SMSF, you will be required to complete and submit an Annual Checklist. The Annual Checklist is scheduled to be released progressively from early September and the exact release time may change depending on the Checklist data preparation. If you have previously provided some information to our office (e.g. when you requested our office to prepare the rollover), ESUPERFUND will manage to complete some parts of the Annual Checklist based on all available information.
You will be notified to review the Checklist information prefilled by our office and complete any remaining Checklist Steps via the Client Portal Inbox. On receipt of the Annual Checklist information from you, ESUPERFUND will attend to the preparation of the final Tax Return and Audit for your SMSF in the order in which the Online Checklist is submitted.
On completion you will be notified that the final Compliance Documentation is ready for review and signing via your Client Portal Inbox. Once you are satisfied that the documentation is correct, you have to sign to authorise ESUPERFUND to lodge the final Tax Return with the ATO.
The time frame required to finalise the final Tax Return is around 3-4 months from the day you submit the Annual Checklist.
Step10:
ESUPERFUND lodges the final Tax Return with the ATO
On receipt of the signed documentation from you, ESUPERFUND will lodge the final Tax Return to notify the ATO that your SMSF is being wound up.
Step11:
Settle all expected final Tax Liability / Refund (if any)
If the lodgement of the final Tax Return results in a further Income Tax Liability, you will need to pay the Tax Liability to the ATO before the lodgement due date using your personal funds.
If the lodgement of the final Tax Return results in an Income Tax Refund and you are eligible for super withdrawals, you will need to pay out the residual Super Benefits in the SMSF bank account as soon as the Tax Refund is received from the ATO.
If the lodgement of the final Tax Return results in an Income Tax Refund and you are not eligible for super withdrawals, an additional rollover via SuperStream will be arranged by ESUPERFUND for you to roll out the residual Super Benefits.
IMPORTANT NOTE: You should not close your SMSF bank account until the final Tax Return is lodged and all expected final Tax Liability / Refund has been settled with the ATO.
Step12:
Receive confirmation from the ATO that your SMSF has been wound up
Please note that your SMSF is not wound up in the ATO's records until the final Tax Return is lodged and all expected final Tax Liability / Refund (if any) is settled.
If everything has been completed correctly, the ATO will send you a letter stating that they have cancelled your SMSF ABN and closed your SMSF records.
Section 4: Complete residual procedures
Step13:
Close bank and broker accounts
You need to close all bank and broker accounts held by your SMSF after the SMSF is wound up. Please contact the bank and broker directly to arrange for the accounts closure.
Step14:
Deregister the Corporate Trustee Company if applicable
If your SMSF has a Corporate Trustee structure and the Corporate Trustee Company is only set up for the purposes of the SMSF, you need to deregister the Corporate Trustee Company after the SMSF is wound up. For the detailed information regarding the process to deregister a Corporate Trustee Company, please contact the ASIC directly on 1300 300 630.
Step15:
Download all documentation from the ESUPERFUND Client Portal
You can download all the documentation held by ESUPERFUND for your SMSF from the Client Portal - “Documents” - “All Documents”. As Trustees, you are required to keep records that allow the preparation of Financial Statements and Annual Tax Returns. This information needs to be kept for at least five years after the end of the Financial Year, even after your SMSF has been wound up. For more information on the ATO's record-keeping requirements, please click here.
Please note that your Client Portal access will be removed in 28 days after the lodgement of the final Tax Return.