by Abra Chowdhury
To be eligible to take advantage of concessional tax rates, a super fund must meet the definition of “complying superannuation fund” which includes being an “Australian Superannuation Fund”.
It is an ongoing test, so if at any time a fund fails, then they won’t meet the definition of “complying superannuation fund”. Where a SMSF fails to meet the definition, it could be taxed at up to 45% on both assets and income! Check out Residency Test Flowchart.
The following 3 tests are applied to determine the residency status of a SMSF:
The fund will continue to meet this requirement even if the trustee temporarily lives outside Australia for up to two years. If the member is overseas for longer than 2 years, the trustee may appoint a power of attorney, to ensure central management and control of the fund remains in Australia.
If you have SMSF clients moving overseas for more than 2 years, we recommend you seek professional advice about maintaining the fund’s residency status. The ATO have indicated they will not pursue funds where trustees have been stranded overseas due to COVID-19.
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