Self-managed superannuation funds have an advantage in accumulation phase for people who want absolute control over how their super is invested, and prefer to use direct investments. This benefit does come at a higher cost, compared to having an accumulation account with an industry fund, or a low-cost commercial capital.

At the point when an individual or a couple are in annuity stage, the advantage of not dealing with levels of an organization to get to retirement benefits – when added to the control that individuals have over their speculations – is a motivation behind why self-managed superannuation fund are very popular once a super pension is commenced.

The higher cost disadvantage of a self-managed superannuation fund, even when compared with low-cost industry funds, reduces significantly due to higher administration fees charged on pension accounts. When clients are presented with the advantages of aself-managed superannuation fund in retirement phase, despite there being a slight additional management cost, it is not surprising that they choose to have a self-managed superannuation fund.

There does, however, come a time when the value of the accounts in an self-managed superannuation fund decreases to the point where there is a significant cost disadvantage compared to the alternatives, or one of a couple dies and the work required of the trustees of the self-managed superannuation fund becomes too onerous.


 What to do and what not to do?

This often leads to the funds rolled into another super fund and the self-managed superannuation fund being wound up. Unfortunately, the steps in an information sheet produced by the ATO, designed to assist in the winding up a self-managed superannuation fund, could create more problems than it solves.

The ATO data sheet contains a table that details what trustees must and must not do when winding up a fund. It is this chart that could cause problems. One of the most important steps on the ATO list is a warning for trustees to make sure they deal with member’s assets and contributions correctly. This sign mainly relates to funds where members have not met a condition of release.

The steps to wind up the fund are:

  • an audit IS conducted of the fund
  • prepare and file  final tax return for the fund
  • write to ATO within 28 days that the fund is closed
  • Do not close the bank account until the final tax return has been filed and all the assessment issue taken care of! Click here!

ATO requirement: problem + solution

It is the necessity by the ATO to get ready and lodge an income tax return before twisting up a self-managed superannuation fund, and keeping the fiscal balance open; that makes the issues.

Firstly, as most finances are ended up amid a related money year, the final tax return can’t be stopped until after the end of the budget period it is twisted up.

Secondly, as the tax return will not be submitted until after the end of the tax year, and because self-managed superannuation fund bank accounts in most cases earn interest, the fund will make income in the exercise after it was wound up and this would require another tax return to file.

An answer for this issue is for a sum to be paid into the trust record of the super fund’s accountant to cover the cost of winding up the asset and lodging the return, the ledger closed before June 30. If necessary, the trust record can be utilized to store a discount as an aftereffect of submitting the final tax return. If you need any help or for more information