Key Highlights

• No. Benefits and rollovers must be lawful, liabilities settled and the fund formally wound up.

• Yes. The fund needs a final independent audit before lodging its final annual return.

• Only after income, expenses, tax and other liabilities have been received or paid.

• No. Once wound up, its ABN cannot be reactivated and a new fund would need to be established.

Many trustees think of closing an SMSF as a simple matter of paying out members and shutting the bank account. In practice the ATO sets out a sequence of steps that must be worked through in a sensible order, and getting that order wrong can leave a fund unable to settle its final obligations — or exposed to avoidable tax.

What the ATO expects when you wind up

According to ATO guidance on winding up an SMSF, trustees should first check the trust deed, which may set out how the fund must be wound up. From there the broad steps are: deal with all of the fund's Assets (sell them, or roll over and pay out member benefits); obtain an actuarial certificate where required, such as for certain pension funds; complete a final SMSF annual return and pay any outstanding tax and the supervisory levy; use SuperStream to roll benefits to APRA-regulated funds; and pay all expenses and liabilities.

Crucially, the ATO advises that trustees should not close the SMSF's bank account until all liabilities are settled and the final return has been assessed and any refund received. A final audit is required before the final return can be lodged, and the ATO must be notified once the fund is wound up.

Why the bank account should close last

The most common sequencing risk is closing the fund's bank account too early. The account is how the fund pays its final tax Liability and the supervisory levy, receives any tax refund, settles the auditor's fee and meets any residual expenses. Close it before the final return is assessed and you may have no compliant way to receive a refund or pay a shortfall — potentially forcing the account to be reopened or creating administrative headaches with the ATO.

That is why the ATO explicitly lists bank-account closure last. Treat the account as the fund's financial lifeline until the very end of the process.

Disposing of assets and commuting pensions in the right order

A second risk area concerns the order of disposing of assets and commuting pensions. Selling assets can crystallise capital gains, and the tax outcome may differ depending on whether the fund is still paying a retirement-phase pension at the time of sale. Commuting a pension changes the fund's tax position. The interaction between when assets are sold, when pensions are commuted, and when benefits are rolled over or paid out can materially affect the fund's final tax bill.

There is no single universal "sequencing mistake" that applies to every fund — circumstances differ. But the general lesson is that these steps are interdependent, and reordering them without advice can produce an unexpected tax result.

Hypothetical example

The Nguyen Family super fund has two members in retirement phase and holds a parcel of listed shares carrying a large unrealised gain. The trustees decide to wind up. If they commute the pensions and move the fund to accumulation phase before selling the shares, the Capital Gain may be taxed differently than if the assets were sold while the pension was still running. The order of these steps — and the timing of rollovers via SuperStream — can change the final return's tax outcome. The trustees seek tax advice before acting, rather than assuming one order is always best. This example is illustrative only and is not advice.

Important steps and requirements

Several elements are non-negotiable. A final audit by an approved SMSF auditor must be completed before the final annual return is lodged. The final return must account for the wind-up year and any tax and levy owing. Rollovers to APRA-regulated funds must generally go through SuperStream. An actuarial certificate may be needed where the fund paid certain pensions. And the trust deed should be consulted first, because it may impose its own requirements.

Risks and mistakes to avoid

Beyond closing the bank account too early, watch for: winding up before all assets are actually dealt with; forgetting the final audit as a precondition to lodging; overlooking the supervisory levy in the final return; and assuming rollovers can bypass SuperStream. Trustees should also keep records — the fund's obligations do not vanish the moment members are paid out. Avoid rushing the timeline to hit an arbitrary deadline if it means sacrificing a tax-efficient sequence.

What trustees should watch next

Confirm current ATO guidance on winding up before you start, as processes and reporting can be updated. Note the interaction with Division 296 from 2026–27 if any member has a large balance, and Factor in the proposed supervisory levy increase from $259 to $295 (a Government proposal, not yet law) when budgeting final costs. Coordinate the final audit and return lodgement dates with your Accountant and auditor.

The bottom line

Closing an SMSF rewards patience and order. Deal with assets and pensions thoughtfully, complete the final audit and return, settle every liability, and close the bank account last. There is no one-size-fits-all sequence, which is precisely why the timing decisions Warrant qualified tax advice. Follow the ATO's framework and seek appropriately qualified professional advice for your fund's circumstances.