Validation Error
This validation error occurs when a fund that is not winding up has an active member's account balance that is zero. The ATO requires that an SMSF have a balance in its member accounts at the end of the year for electronic lodgement.
How to resolve this Validation Error
To resolve this issue:
- From the Member Dashboard, locate the member account with a zero balance.
- Decide whether the Member Account in question should be active (have a positive balance) at the end of the financial year.
Option 1: To close a member's account
If the member's account should be closed, you will need to select the Member Account, then select View Details, then select Edit and under Account Details, input an Account End Date when the member's balance should be zero.
If the member's account has a negative balance, you may need to use the Member Allocation Worksheet to get the member's balance to zero.
The balance must be zero before you can apply an end date to the account.
Option 2: To keep the member's account
If you would like to keep the member's account and not close it, you can use the Member Allocation Worksheet to give the member a positive balance.
Lodging a Paper Return
The ATO does not allow the electronic lodgment of an SMSF Tax Return where a member has a nil balance. If you need to lodge the return with a nil balance, you can lodge a paper SMSF Annual Return instead.
For more details, refer to this ATO Article - Self-managed superannuation fund annual returns