To be considered compliant and eligible for tax concessions, a SMSF must meet the Australian residency requirements. If your fund is deemed non-complying, its assets and its income is taxed at the highest marginal rate. To qualify as a resident superannuation fund, your fund must pass the residency test which has three elements:

1. Your fund was established in Australia, or at least one of the fund’s assets is in Australia.

2. The central management and control of your fund is ordinarily in Australia.

3. Your fund must either have no active members or have active members who are Australian residents who hold at least 50% of:

• the total market value of your fund’s assets attributable to super interests, or;
• the sum of the amounts that would be payable to active members if they decided to leave the fund.

Your fund is required to pass all three elements. For the central management of the fund, any departure from Australia on a permanent basis for any length of time will not meet this requirement, however a departure on a temporary basis for up to two years will meet this requirement. A member is considered active if:

• they are a contributor to the fund or;
• contributions are being made to the fund on their behalf.

A member is inactive if:

• they are no longer resident in Australia;
• they are not making contributions to the fund, and;
• any contributions made to the fund after they have ceased to be resident were in respect of the period in which they were Australian residents.