The SMSF Residency Rules Trustees Have To Abide By

Though we all seek for stability and security, in the world we live in, change is one of the surest constants. Since we all want to have a comfortable life, even in the years well off after our jobs end and we become pensioners, it is natural to have worries of the financial future and this is where an SMSF comes in handy, which offers the stability you seek. It is not surprising the number of people setting up their own SMSF is constantly on the rise. The reason for this lies in the security the superannuation gives to people regarding their retirement and the convenience of setting up this fund which can be seen in the possibility of it being available to self-employed people as well.

The wisely set tax strategies, the option of having more members contributing to the fund and the chance to invest in properties, markets or shares are more than appealing. If you have already considered the SMSF as your gateway to a better future, you have probably read through some basic rules and received pieces of advice. It is important to be well informed on what it is exactly you will be expected to do as a member (trustee) of the fund, bearing in mind everything has to be done in compliance with ATO (Australian Taxation Office) regulations. Along with staying on track with the sole purpose test and providing all the benefits of the fund upon the retirement of the trustees, to be able to get tax concessions you will have to abide by the SMSF residency rules that professionals can help you with and give you the information you need.

First and foremost, it is necessary that the fund be established in Australia. In case of no possibility for that, one of the fund’s assets must be Australian, so long as the initial contribution for the fund is not being paid and accepted elsewhere other than in Australia. The other remaining SMSF residency rules are somewhat similar: the management and control of the fund has to be done in Australia meaning all strategic decisions and activities are not performed elsewhere. The third rule consists of a test to see if members are active, i.e. those who are Australian residents and hold 50% of the market value of the assets or the fund itself.

Exceptions are made when the members of the fund have to go overseas so the central management and control have to be temporarily done outside of Australia but it cannot be carried on for more than two years. When overseas on a permanent basis, trustees can keep their role as such by having the management and control taken over by the Power of Attorney. Members who become non-residents can contribute outside of the SMSF through a retail. To be on the safe side, it is advisable to always seek professional help and guidance.