COMPLIANCE
Residency matters
There is no point in establishing an SMSF if it cannot be classified as an Australian superannuation fund. Bryan Ashenden looks at how this definition can be satisfied and the severe consequences should a fund lose this status.
BRYAN ASHENDEN is head of financial literacy and advocacy at BT.
42 selfmanagedsuper
In a world that has returned to a somewhat normal state following COVID-19, the ability to travel and work internationally has opened up again. Extended periods of time outside of Australia can present great opportunities for clients. Travel offers new experiences and enriches the soul, but also in some cases the ability to earn more or possibly minimise tax. During times like these, clients may be looking for ways to invest some of their wealth and the low-tax environment of superannuation looks attractive. However, especially where a client has an SMSF, travelling overseas can introduce the risk of the fund losing its complying status and therefore its concessional tax treatment. The good news is there are strategies to minimise this danger. Additionally, the previous coalition government announced it would introduce measures to remove some of the concerns in this area. The current Labor government has indicated its support to continue with these amendments, but at the time
of writing this article it had not yet introduced this measure into federal parliament in the form of a bill. Before we turn to the strategies and future potential changes, it is important to start by looking at the requirements to be a complying fund and, in this case, what is required to be, and remain, classified as a resident Australian superannuation fund. To meet this requirement, three tests need to be satisfied.
The first test – establishment and investments To satisfy the first test, there are two options available and only one of these needs to have been met. Firstly, the SMSF needs to have been established in Australia. In most cases when we think about where a fund was established, we normally think about where the SMSF trust deed, the signal for commencement of the fund, was executed and this would invariably be within Australia for the majority of cases. However, Continued on next page
