When you first set up a self-managed superannuation fund (SMSF), winding it up is probably the furthest thing from your mind.
But there may come a time when it no longer meets your needs. Perhaps you don’t have the time to manage it efficiently anymore, or you’re moving overseas, maybe you're recently divorced, or a trustee has passed away. Whatever the reason, just like starting an SMSF, there is a proper process to go through.
Good to know: You can’t put an SMSF ‘on hold’. Once you’ve shut it down, you can’t flick a switch and start it up again.
If you have decided to wind up your SMSF, it’s important to understand exactly what you need to do before you start withdrawing all your funds. It is also helpful to understand the costs involved in doing so. Your trustee responsibilities extend for the life of your SMSF, and you may incur fines and penalties if you don’t wind it up properly.
The final year costs for an SMSF will be similar to the annual costs for the ongoing operation of the fund, given that the same compliance and administration tasks are required, along with the additional costs of completing a final return.
As a guide, the most recent ATO data on expenses found average annual expenses in the 2021–22 year were $16,314, while the median was $9,104.
Some of the steps for winding up an SMSF may seem self-explanatory and may have occurred to you already, but some may not. These six steps outline the process and how much you might be out of pocket.
The ATO has also put together a comprehensive guide here which can also be useful in understanding what the regulator wants to see when you wind up a fund.
It’s a complex process, so it may be worth considering professional help.
Read more about seeking financial advice and check out our list of independent financial planners.
Step 1
Check your trust deed. It may outline how your SMSF needs to be wound up and the specific steps you need to complete. It can offer a helpful guide to the processes that must be followed to close your particular SMSF.
