This article will guide you through the recommended steps when winding up an SMSF on Class.

Steps to Wind Up

Navigate to the Fund Level > Fund > Fund Details

1. Click Edit and enter the fund End Date. Wind up date cannot be a future date
2. Navigate to Settings > Fund Defaults, select New Fund Policy to create a fund policy as at 1 July for the year in which the fund ceased. Set Use Tax Effect Accounting to 'No'.
3. Ensure all the investments have been disposed of. This includes disposing of investments that were transferred off-market. Refer to Listed Security Disposal for further guidance
4. Review Pension minimum - especially if pension accounts cease though a full pension commutation. Ensure the minimum has been met from 1st of July to the full pension commutation date. Refer to the Pension Reviews for further guidance. A TBAR is required when pension commutations are processed. When winding up a fund, make sure TBAR files are generated and lodged before the fund is suspended.
5. Arrange the initial member entitlement payments (rollovers, lump sums, or pension drawdowns) to ensure that most member entitlements and the cash balance are withdrawn. Check with the auditor what their “immaterial” cash balance threshold is for the winding-up date, and aim to ensure the cash balance remains below that threshold.
6. Run a Period Update the day before the first member payment (e.g. rollover, lump sum, or pension drawdown). If the initial member payment is a rollover, process a Initiate Rollover Out (via SuperStream) to rollover.
7. Ensure all outstanding debtors, creditors, and/or tax balances are accrued and cleared. You can use a Custom Holding account to record accrued amounts and match them to the related accrued/outstanding business event. The following transactions will likely need to be accrued:
   - Accounting, Administration & Audit Fees
   - Actuarial certificate fees / ASIC deregistration fee (if there is a corporate trustee)
   - Interest yet to be credited
   - ATO income tax for the winding-up year (payments or refunds)
8. When estimating the ATO income tax for the winding-up year, ensure all other accruals have been recorded and the fund is reconciled up to date. Run a Period Update on the winding-up date, and request an actuarial certificate if required. After the Actuarial Certificate is obtained re-run the Period Update once recorded in the New Fund Policy under the field Pension Exempt % (Actuarial)
9. Run a Period Update to the winding-up date, finalise tax, and review Annual Return Section D to determine the ATO income tax for the winding-up year (payments or refunds). Roll back the Tax Finalisation and Period Update, then accrue the ATO income tax for the winding-up year as it has been received or paid. Match it with the Income Tax Payment expense for the winding-up year (ensure the ATO levy has been adjusted to 0).
10. Review Reports > Statement of Financial Position for assets, liabilities, and member entitlements. Check with the auditor whether they prefer a nil balance sheet, where assets, liabilities, and member entitlements are all zero. If so, process the corresponding cash-out transactions to clear all assets.
11. Run a Period Update to the winding up date to process final member entitlement payment events, such as rollovers, lump sums, or pension drawdowns. The final member entitlement payment events can be processed as modified events on the winding-up date to avoid potential period update errors.
12. Process final member entitlement payment events, such as rollovers, lump sums, or pension drawdowns. If the payment is a rollover that includes receivable accrued member benefits e.g. ATO Income tax refunds, use a manual rollover event via Transactions > Member Expense > Rollover/Lump Sum Out to process it. Ensure the manual rollover is not material to avoid a Part B qualification from the auditor—confirm their materiality standard beforehand.
13. Review Reports > Statement of Financial Position again to confirm whether a nil balance sheet has been achieved, where assets, liabilities, and member entitlements are all zero.
14. Run a Tax Finalisation to generate the Annual Return, and lodge the Annual Return once the audit has been completed.
15. If the fund is in the refund position then await for ATO to refund into SMSF bank account. Once the money refunded into SMSF bank account process Initiate Rollover Out (via SuperStream) and make payment using Payment Reference Number for that amount if applicable. Refer to Managing Final Benefit Rollovers via SuperStream When Winding Up a Fund for further details. The ABN is usually cancelled automatically about 28 days after the lodgment.
16. Suspend Fund, by navigating to Fund > Fund Details > Edit > Suspend. This will cease the billing on Class
17. Close the SMSF bank account after the ATO Confirms the Fund ABN is cancelled. 

Key Tips for Completing the Fund Wind-Up

What's Next?

Learn more about How to Electronically lodge the Annual Return for a wind up fund before the end of that financial year