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I have a client who has withdrawn all of the funds in her SMSF ($86k) due to the above reasons. She has 3 young children. This happened 3 years ago and returns have not been lodged since. She wishes to close the fund as the money will not be returned.
I will put all this in the ACR for the year the funds were withdrawn. Can I report this situation and close the fund anyway at 30 June 2022 as the money will not be returned due to the circumstances. What will be the consequences for the member in such a situation?
Is there another way to handle the situation?
Does the client have a current family court proceeding on foot?, If so check with the divorce lawyer before closing the fund.
Hi Jan
Sorry to hear your client's situation.
I assume they have not met a condition of release and were not allowed to access their superannuation from the SMSF.
Yes the SMSF can be wound up if the Fund has no assets (& no money is to be returned re the amounts taken).
The consequences for the member are firstly in relation to the amount taken being treated as early access to superannuation and she having to pay tax personally on the amount taken. Secondly the ATO could raise penalties or take action against the trustee due to breaches of SIS re the early access to her superannuation.
The trustee / member should review the voluntary disclosure requirements re the breach at:
The only other option I can think of is to contact the ATO directly and see if there is a way of getting out of having to lodge the outstanding returns given the circumstances. I assume she does not have the money to pay for fees to prepare wind up accounts / ITR's and audits.
I note that I was recently involved with a Fund that had lost all its assets due to a scam and that the ATO directed that the trustees still prepare a wind up accounts, ITR and organise an audit even given that the Fund no longer had any assets.
Thanks
SMSF AAA