There are many reasons why an SMSF may need winding up, such as due to the death or incapacity of a member or lack of desire to continue with the administration, responsibility or expense. Jo Heighway, Partner, SMSF Assurance & Advisory, at Deloitte Touche Tohmatsu shares 10 tips for winding up an SMSF and allow for a smoother audit process:
The process of winding up an SMSF can be complicated and trustees may not be aware of all the steps involved.
- Ensure the decision and the date of the wind-up are documented. All trustees/directors need to be aware of the situation and this is usually recorded by drafting minutes of the decision and having all trustees/directors sign the minute.
- Ensure no income or contributions are received after the date of winding up.
- If benefits are being paid to the member, dispose of all assets including any fixed interest investments and ensure the bank account remains open.
- In the case of an in-specie transfer, ensure that investments are transferred at market value. It is also important to ensure that valuations are obtained for any related party investments.
- Pay any known SMSF expenses and provide for anticipated expenses, including any income tax payable, prior to winding up.
- Calculate any income tax receivable and document as a receivable in the financial statements. Ensure the closing net asset position of the fund is nil as at the date of wind-up.
- Document any benefit payments, including evidence of how a ‘condition of release’ was met.
- Obtain a copy of the members’ benefit statement and instructions for all benefits rolled over. For audit purposes obtain confirmation the rollover was received by the receiving superannuation fund(s).
- Obtain a copy of the bank statements for the year of audit and up until the date the bank account was closed.
- Ensure the notes to the financials document the fund as a not going concern for the year of wind up.
Jo Heighway is a Partner, SMSF Assurance & Advisory, at Deloitte Touche Tohmatsu. This article is for general information and does not consider the circumstances or investment needs of any individual.