Can you keep your SMSF if you become non-resident?

The short answer to this question is, yes.

But your SMSF must remain an Australian superannuation fund to retain its complying status. To do this, your fund must satisfy the following 3 tests each year:

1. Your fund must be ‘established in Australia’

This test is relatively easy to satisfy, because it is a once-off test as to whether the fund was set up in Australia. If you set up your fund while you are resident in Australia, then you are good to go.

2. Your fund must have its ‘central management and control’ ordinarily in Australia

This test requires that the strategic, investment related and main decisions concerning your fund are ordinarily made in Australia.

You should look at this requirement from two perspectives, the first if you are an individual trustee, and the second, if you have a company trustee.

If you are an individual trustee:

The concept of ‘ordinarily in Australia’ means that an individual trustee who is temporarily outside Australia is likely to be OK, but an individual trustee temporarily in Australia just to make decisions will not satisfy this requirement.

An individual trustee can engage external advice, but they cannot delegate the function of making the strategic and high-level decisions for the fund. The trustee must physically make the decisions themselves, while ordinarily in Australia.

There is an exception to this requirement, being that an individual trustee (or director, see below) can be absent from Australia for a continuous period of up to 2 years, and still not jeopardise the fund’s complying status. To start the 2 year period again, the person must return to Australia for at least 28 days.

If you have a company trustee for your SMSF:

If the trustee of your fund is an Australian incorporated company, then the company will be resident of Australia irrespective of where you are located. However, this alone will not get you over the line. If you (i.e. you personally) are still directing the company as to how to make particular strategic and high-level decisions for your fund, then ‘central management and control’ of the fund will be seen to be exercised where you are located, i.e. outside Australia, and your fund will be non-complying.

If you have a company trustee, and intend on becoming a non-resident, then you should appoint an enduring attorney to act as a director of the company in your place, with the appropriate authority to make the strategic and high-level decisions for your fund. This authority is included in the appointment and in the super fund’s deed. The company, through its resident director(s) can then continue to exercise central management and control in Australia, satisfying this test.

3. Your fund must satisfy the ‘active member’ requirement

Your fund must also satisfy one of the two following criteria:

  • At least 50% of the fund’s assets must be linked to ‘active members’, who are resident in Australia; or
  • Not have any active members.

An active member is a member who makes a contribution during the year.

This means that:

  • If a non-resident member has more than 50% of the funds assets, the fund will cease to be complying if any member makes a contribution to the fund; and
  • Alternatively, if at least 50% of the fund’s assets relate to resident members, then a non-resident member can still make a contribution during the year without impacting the complying status.

So, what do we recommend?

If you have an SMSF and you are planning on being outside of Australia for more than 2 years, then you should get specific advice as to how to deal with your self-managed fund, to avoid it potentially becoming non-complying.

We can help you establish or change your SMSF, and help you make sure your SMSF remains compliant and consistent with your overall estate planning strategy.  Call us on 1300 654 590 or email us and we’d be glad to help.

You may also be interested in our post about essential things to do if your super fund only has one member.

The information contained in this post is current at the date of editing – 19 July 2023.

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