SMSF Vesting Deed to end and wind up your SMSF

You no longer want your SMSF. How to wind up your SMSF.

Your Self-Managed Super Fund (SMSF) has looked after your retirement savings. Now you want to close it. Perhaps:

•  the work has become too much
• the SMSF running costs no longer justify keeping it
• you want another super fund to look after your super
• the members are dead.

Selling or transferring the investments and moving the wealth does not finish the job. You also need to record the decision to close the SMSF, pay its debts and complete its final audit and tax return. Legal Consolidated’s SMSF Vesting Kit provides the legal documents legally required to close your SMSF. This complies with ASIC, the ATO, Centrelink, and bankruptcy rules.

What does “vesting” your SMSF mean?

Vesting means ending the trust. Your SMSF is a trust. Its Deed and any Deeds of Variation set the rules for closing it. Our SMSF Vesting Deed formally ends the fund once it has nothing left.

Who helps wind up your SMSF fund?

Legal Consolidated authors the SMSF winding-up kit. We are a national tax and superannuation law firm:

• We prepare your finished legal documents and certificate from your answers and provide them with our law firm’s cover letter.
• Your accountant completes the accounts and tax work: final tax return, deregisters the corporate trustee if any and cancels the TFN.
• Your SMSF auditor completes the final audit.

Your Legal Consolidated SMSF Vesting Kit gives you five documents

1. SMSF Vesting Deed — provides the deed changes and vesting terms for bringing your SMSF to an end.
2. Vesting Minutes — records the trustee and member agreement to close the fund.
3. Winding-up Checklist — brings the closing tasks together so you and your accountant work through the assets, debts, benefits and final reporting.
4. Certificate of Vesting — gives you a signed record of the SMSF’s vesting to keep with its final documents.
5. Law firm’s cover letter — explains the documents, signing and records, and the work to complete with your accountant and financial planner.

Close your SMSF without overlooking the arrangements it already holds

Your SMSF may have operated for decades. It may hold a pension, a death benefit nomination, a property loan or assets with tax or stamp duty. Closing the fund needs attention to those arrangements.

Our Vesting Deed preserves accrued benefits, existing pensions, death benefit nominations, and borrowing arrangements. This is while the deed changes take effect. We also address existing concessions and restrictions and avoid creating a new trust through the Deed of SMSF Variation.

Helen wants to close the SMSF. She does not want to disturb its old protections.

Helen’s SMSF has operated for decades. Her husband has died. The fund’s documents include a death benefit nomination and earlier provisions protecting pension rights.

Helen needs a deed that addresses those arrangements as she closes the fund. Legal Consolidated’s Vesting Deed expressly preserves existing nominations and accrued benefits as the variation takes effect. Its protective provisions also address earlier concessions and restrictions.

Helen and her advisers work through the remaining benefits and liabilities. They complete the vesting when nothing remains outstanding.

Getting the SMSF down to a zero balance sheet

You need to get your SMSF to have no assets.  We are not involved in that process. Your accountant and property lawyer may need to help you with that.

How do you wind up an SMSF?

1. Record the agreement. Build and pay for your SMSF Vesting Kit. Print it out.
2. Deal with investments and benefits. Arrange asset sales or transfers, calculate member entitlements and pay or roll over benefits as permitted. Closing the SMSF does not itself give a member a right to withdraw preserved super.
3. Settle the bills. Allow for tax, professional fees and other outstanding liabilities before distributing the remaining money.
4. Complete the final accounts and audit. Your accountant prepares the accounts and your approved SMSF auditor completes the audit before the final return.
5. Lodge the final SMSF annual return. Your accountant reports the wind-up to the ATO through that tax return.
6. Complete the vesting documents. Follow the cover letter and coordinate the signing and effective date with your advisers.
7. Close the bank account last. Keep it open for final payments, refunds and rollovers, and until the ATO confirms the wind-up.
8. Sign the Certificate of Vesting. Once you have a balance sheet showing no assets, sign and date the Legal Consolidated Certificate of Vesting

The ATO sets out its tasks for winding up an SMSF. The audit and annual return obligations sit in s 35C and s 35D of the Superannuation Industry (Supervision) Act 1993 (Cth).

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Your SMSF is empty. Do you still need to close it?

You rolled the super into another fund. The SMSF bank balance is zero. You put the paperwork away. However, the SMSF still needs a formal winding up. A zero balance does not close the trust or satisfy ATO rules.

Give your accountant the fund’s records and complete the outstanding work. Keep the signed Vesting Deed, Minutes and Certificate with the final accounts and return. The final SMSF annual return tells the ATO about the wind-up. You do not separately cancel the fund’s ABN; the ATO deals with that after processing the wind-up.

Frank’s accountant finished the accounts. Frank thought the SMSF had closed.

Frank sold the shares and rolled his super into another fund. His accountant prepared a zero balance sheet. Frank put the folder away.

Two years later, Frank needs to establish when his SMSF ended. The accounts show where the money went. Where is the signed record that ends the fund?

With Legal Consolidated’s Vesting Kit, Frank and his accountant complete the closing documents. Frank signs the Minutes, Vesting Deed and Certificate as instructed. He keeps them with the final accounts. He now has the financial records and the legal record of closure.

“You closed the SMSF. Where did the money go?”

Consider this example. You close your SMSF and apply for the Age Pension. You tell Centrelink the fund has nothing left. The next question is where the money went.

Give your accountant the signed Vesting Deed, Minutes and Certificate. Keep the final accounts and bank records with them. Together, they show when the SMSF ended and where its money went. Services Australia explains how to update your superannuation details and supply supporting documents.

Build your Legal Consolidated Vesting Kit. Keep the proof with the paperwork that closes your fund.

Does winding up your SMSF also close its trustee company?

No. Your SMSF and its trustee company are separate. Closing the SMSF leaves the company registered. Ask your accountant to deregister the corporate trustee with ASIC. If you want to use the company for another purpose, build a Company Update.

Keep proof after your SMSF closes

Your signed minutes record the decision. Your Deed and Certificate record the vesting. Keep them together so you and your advisers can see the history if a question arises later. This is for Centrelink, the ATO, ASIC, bankruptcy courts and family courts.

Section 103 of the Superannuation Industry (Supervision) Act 1993 (Cth) requires you to keep trustee meeting minutes and decision records for at least 10 years. The ATO’s guidance for SMSF auditors recommends keeping required wind-up records for at least 10 years after lodgment of the final annual return.

A creditor wanted her car. Her records told the story.

AFSA publishes a case study about Karen, a retired teacher. During bankruptcy, she withdrew $50,000 from her regulated super fund. She bought a car and paid for family travel. An angry creditor demanded that her bankruptcy trustee take the car.

AFSA asked for proof. Karen produced the bank records. They traced the money from her super fund to the car dealer and travel agent. AFSA confirmed that the lump sum she received after bankruptcy, and the car bought with it, were protected. Read AFSA’s published case study.

The lesson for closing your SMSF is simple. Keep the evidence. Your Legal Consolidated Vesting Kit records the decision and the fund’s end. Your accounts and bank records trace the money. Keep both sets together.

Build your SMSF Vesting Deed with Legal Consolidated

Answer the questions and read the hints as you go. Save your answers and return later. You receive the Vesting Deed, Minutes, Checklist, Certificate and our law firm’s cover letter. Start building for free and pay when you purchase the completed documents.

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Free SMSF resources for the next step

Read about the documents and arrangements that may need attention as you close your SMSF:

• Updating your SMSF Deed, trustees and members — understand the governing rules and changes to the fund.
• SMSF borrowing and the Custodian Bare Trust — understand the holding structure where your fund borrowed to buy an asset.
• Commercial leases for SMSF property — consider the lease when dealing with the property.
• Power of Attorney for an SMSF Corporate Trustee — read about authority where a director loses capacity.
• Reversionary pensions — understand pension arrangements after a member dies.