SMSF residency conditions
A self-managed super fund (SMSF) is an Australian superannuation fund if it meets all 3 of these residency conditions at all times during the financial year:
- established or has assets held in Australia
- central management and control ordinarily in Australia
- active members.
Established or has assets held in Australia
The SMSF must be established in Australia, or at all times during the financial year have at least one of its assets located in Australia.
The SMSF is considered to be 'established in Australia' if the initial contribution to establish the fund was paid and accepted by the trustee of the fund in Australia.
It is not necessary that the SMSF trust deed is signed and executed in Australia.
Central management and control ordinarily in Australia
The central management and control of the SMSF must be ordinarily in Australia.
This means your SMSF's strategic decisions are regularly made, and high-level duties and activities are performed, in Australia. It includes:
- formulating the investment strategy of the fund
- reviewing the performance of the fund's investments
- formulating a strategy for the prudential management of any reserves
- determining how assets are to be used for member benefits.
In general, your fund will still meet this requirement even if its central management and control is temporarily outside Australia for up to 2 years. If central management and control of the fund is permanently outside Australia for any period, it will not meet this requirement.
Active members
The SMSF must either have no active members or active members who are Australian residents who hold at least 50% of either:
- the total market value of the fund's assets attributable to super interests
- the sum of the amounts that would be payable to active members if they decided to leave the fund.
What to do if members go overseas
If your members are planning to go overseas for an extended period, consider getting professional advice about maintaining the residency status of your SMSF.
If a member of your fund becomes a non-resident but still wishes to make or receive contributions, they should do this outside the SMSF, for example through a retail or industry super fund. They can then roll over the contributions to their SMSF when they return as an Australian resident.
If your SMSF fails the residency test, you should roll over your funds to a regulated Australian super fund and wind up the SMSF. Otherwise, the fund will become non-complying.
For more information, see Tax Ruling TR 2008/9 Income tax: meaning of 'Australian superannuation fund' in subsection 295-95(2) of the Income Tax Assessment Act 1997.