The Australian Taxation Office (ATO) has amended its requirement for self-managed superannuation fund (SMSF) trustees who have wound up their fund to keep an associated bank account open until confirmation of the closure has been received.
Instead, SMSF trustees can now close the fund's bank account once its final liabilities have been settled.
Circumstances may arise where a tax liability is incurred after the fund has been wound up and the ATO has said in these cases the liability can be prepaid or paid with lodgment. This includes situations where the final SMSF levy is received after the fund's closure.
"Maintaining an open bank account isn't required by legislation but has been a regulator recommendation. We are now clarifying this recommendation as it is not relevant for the vast majority of SMSFs who can work out their final liabilities," the ATO said.
However, if the SMSF being shut down has qualified for a tax refund, the associated bank account must remain open. This usually would occur after the SMSF's final return has been lodged.
In these rare scenarios, the bank account has to be left open so the refund can be received. After this, the funds should be rolled over into the successor complying fund, which will then allow the SMSF bank account to be closed.
Here a rollover form to the complying fund would be needed, but an additional annual return for the SMSF would not.
The ATO is aware some financial institutions will allow trustees to bank the cheque themselves if they can prove the SMSF has ceased to exist, and has warned this process is fraught with danger.
"The practice of paying the money to an individual must not occur as the refund is a protected retirement asset and this money must stay within the super system until a condition of release has been met," the regulator said.
"The only time the money can be accessed in the way described by the agent is if the individual is entitled to the money, as a withdrawal from the super system (for example, a lump sum/pension payment once they have met a condition of release)."
