SMSF winding up but account still has expenses which will lead to negative member balance

 Author: KaraATO(Community Support)Community Support

8 May 2026

Hi @Katana0103,

An SMSF can’t have a negative member balance. When winding up an SMSF, trustees must ensure there are enough funds left in the SMSF to pay all expected expenses (such as accounting, audit and tax liabilities) before making the final member benefit payment.

In your case, the member withdrew the full balance in the 2025 financial year, and the bank account was closed, even though further expenses were incurred in FY 2026. Because the fund had no remaining assets, the subsequent accounting and audit fees can’t be allocated to the member’s account, as this would create an impermissible negative balance.

There isn’t an accounting work‑around within the SMSF to fix this. The issue arises because the fund was effectively wound up before all liabilities were settled. The fact that the estate paid those costs afterwards doesn’t allow them to be brought into the SMSF accounts in the usual way.

You’ll need to discuss this with the estate’s legal representative and an SMSF specialist to determine how the estate‑paid expenses should be treated outside the fund, and how the final SMSF accounts and return should be completed from a compliance perspective.

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