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We have received a 2021 fund to audit (as a wind up) which has assets consisting of share worth around $250 and a tax refund due of aproximately $2000. The shares are set up for DRP and further shares continue to be issued. The shares are still held now in July 2023. Our understanding is that a fund cannot be wound up until all assets are disposed of. I also understand that we are not required to audit the tax return which is the only notification of the wind up. I am unsure what to do, should this be considered in my audit or is it outside the scope?
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Hi Kate
There are 2 parts to your query.
Can a Fund have a tax refund received after its wind up date?
The answer to this is yes and this is supported by the ATO recently extending the cancellation of a Fund's ABN to 28 days (was 14 days) after a SMSF's final ITR / annual return has been lodged.
This means that SMSF’s can still use SuperStream during this time and it allows the SMSF's final ITR (annual return) tax refund to be received and then a final rollover be done via SuperStream (if required).
2. Can a Fund have assets at wind up?
The answer is no in that all Fund assets should have been disposed of at the Fund's wind up date.
In your example my view given the small value of the share holding at $250 would be to still allow the wind up of the Fund as at 30 June 2021. I would raise this issue in the auditors management letter to the trustees. You could also consider raising the issue in the Auditors Contravention Report (re reporting other information to the ATO using your professional judgement). Again given the amount involved this may not be required.
(Other forum members may have a view re the ability to wind up the SMSF in this example given the shares still being held. Please let the forum know of any differing views.)
The ATO has a guide to winding up a SMSF at:
https://www.ato.gov.au/uploadedFiles/Content/SPR/downloads/n75417_Winding_up_a_SMSF_(Life_cycle_3_of_3).pdf
The ATO does state that:
"Lodging your final SAR will notify us of your intention to wind up. Once processed we will then confirm your fund has been wound up by sending you a letter stating we have:
■ cancelled your SMSF’s Australian business number (ABN)
■ closed your SMSF records on our system."
That is lodging the final annual return is all that is required to advise the ATO that the Fund has wound up.
Thanks
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