Money in the bank when winding up an SMSF
A self-managed fund does not have to have zero assets to be wound up and lodge its final ATO return, according to the technical expert of leading SMSF educational platform.
Mark Ellem, head of education at Accurium, said it is not necessary for an SMSF to close its bank account at the time it is winding up according to the ATO’s own publication.
Mr Ellem said according to the ATO’s ‘Winding up a self-managed super fund’ (NAT 75417) , the regulator states an SMSF should close its bank account as a last step in the winding up process, after it has paid all final liabilities, received all final refunds from the ATO, completed rollovers using SuperStream and finally received confirmation that the fund has been wound up.
“This implies that on 30 June in the final financial year of the SMSF, the year the fund is wound up, there will be expected to be a balance in the fund’s bank account and other items on the fund’s Statement of Financial Position,” he said.
“The important factor is that the net member balances are nil and that the only assets included on the final Statement of Financial Position are cash at the bank and a provision for an expected tax refund.”
Mr Ellem said although the ATO advises for an SMSF to keep open its bank account to receive returns it is owed, if it is open past the end of the final income year there will be no requirement to lodge a return in the subsequent income year.
“Once all liabilities have been paid, including the payment or rollover of any residual member benefits, the bank account is closed,” he said.
“While the SMSF’s bank account may remain open, with a balance, post year end of the year of the final SMSF Annual Return, the balance held in the fund should be nominal, normally an amount that is required to keep the fund operating.”
The final fund expenses that can be paid from the bank account include fees for administration and accounting, auditing, actuarial compliance as well as the estimated fund income tax, ATO supervisory levy and any ASIC fees in regard to the deregistration of the trustee company.
“With prepayment of these expenses, a nominal amount of assets left will not prevent the fund from being wound up effective at year end, even where these assets exist post year end,” Mr Ellem said.
He said once the final audit has been completed and the audit report issued, the final return can be lodged.
“Once the final return has been lodged the ATO will attend to cancellation of the SMSF’s Australian Business Number (ABN) and close the fund’s record on the ATO’s system,” r Elle said.
“The ATO will write to the SMSF trustee(s) to confirm. Previously, the time period from lodgement of the final return and cancellation of the fund’s ABN was 14 days, however, this has been extended to 28 days to provide time for any residual member benefits to be rolled out to another complying superannuation fund via SuperStream.”
