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SMSF – Your questions answered, day 11 – should I close my SMSF?

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I am aged 60 and want to close my small self-managed super fund (SMSF). Should I do this before the end of the tax year? I’ve been paying capital gains tax (CGT) on realised gains and want to keep super in case I decide to work again, but I don’t want to tie it up.

There shouldn’t be a problem maintaining your SMSF. You can run separate accounts for pension and super. A consensus with my colleagues says you should think about starting the pension before making any further asset sales to minimise your CGT.

Also, you should speak to your accountant to obtain further advice on the requirements for starting a pension and ensuring that your trust deed is up to date.

This is a classic case where professional help should be sought so that your personal circumstances are fully considered. The transition from super to pension mode is a very important one and decisions made to save money in the short-term could have disastrous consequences in the long-term. Also, SMSFs are administered by the Australian Tax Office and any mistake could also result in penalties and unfavourable tax treatments.

Important information: This content has been prepared without taking account of the objectives, financial situation or needs of any particular individual. It does not constitute formal advice. For this reason, any individual should, before acting, consider the appropriateness of the information, having regard to the individual’s objectives, financial situation and needs and, if necessary, seek appropriate professional advice.

Published on: Thursday, January 06, 2011

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