Meg Heffron, director of Heffron, said if an SMSF has had no major events within the year, such as new pensions, large contributions or commutations, it is often likely the previous year’s certificate will be a “reasonable predictor” for the current year.
“However, if things have changed a lot, an updated estimate from an actuary may be needed,” she said.
“This is where the challenge may lie as the actuary can’t issue a certificate until the end of the year or the date the fund is officially wound up, but accountants and trustees often need to calculate fund balances earlier to roll them out of the fund.”
She said many actuaries can provide an estimate using software platforms, but it is important that the SMSF indicates that the estimate is needed for a wind-up rather than the final calculation and certificate, or the certificate may not be valid.
“At the end of the year, or once the fund really has been wound up, you’ll still need to re-submit data for the whole year to get a final percentage and certificate.”
“That’s the figure that must be used on the fund’s final tax return. But it’s usually fine to work out mid year balances using an estimated actuarial percentage.”
However, if there are significant changes to the fund between when the estimate is made and the final figure is determined, there could be difficulties, she said, adding that if changes occur, it is best to warn the actuary so they can allow for them in the calculations.
“You should also delay getting the final certificate until the fund really has been wound up and money transferred out of the fund. Otherwise, unexpected delays will mean a new certificate is required, as it won’t be valid if it’s based on incorrect data.”
“Legally, the value of a member’s account balance at any time is the amount they’d be entitled to if they left the fund at that time. Believe it or not, that amount doesn’t have to be calculated with perfect hindsight.”
She added that in an SMSF that’s being wound up, there is often a small amount of money left at the end, which is needed to capture final tax refunds and pay final costs.
“That often means there is a small final payment or rollover – but this can simply be an additional payment at the time, it doesn’t mean the earlier rollover was wrong.”
