Residency of self-managed super funds

Do you know that your self-managed super fund (“SMSF”) could be made non-compliant if you are seconded overseas for more than 2 years?

If your SMSF ceases to be a complying fund because it does not satisfy the residency rules, an amount equal to the market value of the fund’s total assets (less any contributions the fund has received that are not part of the taxable income of the fund) will be included in the fund’s assessable income. This amount is subject to the highest marginal tax rate.

For every year that the fund remains non-complying, its assessable income is taxed at the highest marginal tax rate. To make the matter worse, a similar amount is included in the fund’s assessable income when the fund regains its Australian status.

There are various strategies to avoid such a disastrous tax result. The key is to undertake careful planning before your departure.

For more information about how this may affect you, contact Matt Zhou on 02 9957 4033.