Winding up of a super fund requires dealing with and disposing of all of the fund's assets so that none remain, and completing all the reporting and administrative obligations of the fund:
- Complete any requirements that the trust deed specifies about winding up the fund;
- The trustees need to arrange for all investments to be sold and deposit the money into the super fund’s bank account;
- Payout or roll over all super benefits (leaving a sufficient amount to pay final tax or expenses if required);
- Appoint an approved SMSF auditor to complete the final audit;
- Complete and lodge the final SMSF annual return (including wind up details);
- Pay any outstanding tax liabilities of the fund;
- After all expected liabilities have been settled and requested refunds are received, close the fund’s bank account.
Winding up Funds in SF360:
There are four main steps that should be followed when winding up a superannuation fund in SF360:
- Process ALL transactions for the fund
- Reverse Tax Effect Accounting (Optional)
- Enter an end date for the fund
- Perform final create entries and clear amounts in the clearing account
Step 1 - Process all transactions for the fund
The first step to winding a fund up requires all of the entries for the current period (up to the date of the wind up) to be processed via manual Transaction Input or uploaded and matched using SF360's Connected Services and Smart Matching features.
- All disposals of Assets will need to be processed so the investments show nil quantities. SF360 will then know to reverse any revaluation/devaluation differences when the final create entries is processed.
- Turn off Tax Effect Accounting (if applicable)
- Where a member is in receipt of a pension, ensure that the minimum pro-rata pension payment has been paid
- For Pension funds, ensure that fund has applied for and received an actuarial certificate. See Fund Pension Policies
- Where the fund is paying market Linked or defined benefit pensions, this pension will need to be transferred to another complying super fund.
Example 1: On the wind up date of 25 May 2015, an accumulation fund with assets below is to be rolled over to a new superannuation account.
- 1,000 units of shares at $29.48 per share (originally purchased at $50 per share)
- Fund Bank Account of $150,000
- A property to be sold for $605,000 (Book value at $585,000)
From Main Toolbar, select Accounting - Transaction List. Select Journal from the drop-down list.
Put the transaction date as of the wind up date, credit all investments and post to Account Code 46000 (Benefits Paid/Transfers out) in order to process disposals. All Units on hold need to be filled in the Units field to trigger a full disposal. (Note bank accounts are recommended to be processed at the last step as this would show the final figure to pay out to the members)
Click on More beside the Account 46000 and select Transferring from one Super Fund to another from the drop-down list as Type of Payment.
Fill in the Rollover Fund from existing contacts. Alternatively, add new contacts as Other Entity. See Contacts
After completing the journal, the transaction can be found below. Note net gain/loss on disposal will be automatically calculated and posted to Account Code 24700 (Changes in Market Values of Investments).
Step 2 - Reverse Tax Effect Accounting (Optional)
Tax Effect Accounting
Please ensure that Tax Effect Accounting has been turned off for the fund prior to completing this step.
See Tax Effect Accounting for more details.
Confirm the amount of PDIT to write back by checking account 89000 in Simple Fund 360's Live Reports screen. The amount to writeback will be the opening balance of the 89000 account for the year the fund is being wound up in.
Once this amount has been confirmed, refer to Writing back tax deferred amounts for details on writing back this amount.
Step 3 - End dates for fund
Record an end date for the fund.
For recording a wind up date for a fund, please refer to: Fund wind up date
Step 4 - Final Create Entries
The final create entries will need to be processed to ensure that member payout transactions are created by Simple Fund 360 and that the final tax position can be determined.
Please refer to How to complete the year end create entries for more information.
Once this has been completed, Simple Fund 360 will automatically generate Member Payout transactions. These can be seen in the Transaction List.
Example 2: A fund with a pension and accumulation account to wind up.
The final tax payable/refundable by the fund will also be calculated by Simple Fund 360. This figure will need to be recorded and used later in clearing the amounts sitting in the Manual Suspense Account (99900).The tax payable/refundable amount can be seen in the fund's Annual Return. To generate the SMSF Annual Return, select Reports from the Main Toolbar.
In this example, the Income Tax Payable is $3,554.89 as shown in the Annual Return.
Finally, you will need to clear the Manual Suspense Account and adjust the bank account to reflect the tax payable/refundable amounts.
This can be done by posting the following journal:
|Manual Suspense Account - 99900||$467,326.09|
|Bank - 60400/Bank||$463,771.2|
|Income Tax Payable/Refundable - 85000||$3,554.89|
Note that in this example, there is a Tax Payable amount. The exact journal to use will depend on the fund's final tax position.
To view the:
- Lump Sum Prepayment Form
- PAYG Payment Summary
Click to open up the member payout transactions generated by Simple Fund 360 on the Transaction List page, then click on Save and select Save & Prepare Documents.
Where an SMSF is wound up during the Current Financial Year you will be able to prepare the prior year's SMSF Annual Return and lodge it through Simple Fund 360.
When winding up a fund, please ensure that the member components in the Members Statement are all 0.
If these member components are not 0, you will need to clear out the member components. To clear out the members components, use the Update Member Components feature to set all member component amounts to 0.
Please refer to Update Member Components for more information