SMSF practitioners should not wait for the ATO to inform them when a fund loses its status as an Australian super fund and if they can assess that situation from information to hand, they must report it on the annual return, an SMSF specialist adviser has stated.
RSM Australia superannuation and SMSF partner Katie Timms said having non-resident members in an SMSF had a flow-on effect and could create non-resident funds, which needed to be brought to the attention of the ATO.
“As we know, to be an SMSF one of the first things is that the trustee or member has to be a resident, while the fund must be established in Australia or have Australian assets, and central management and control (CMC) must ordinarily be in Australia and can meet the active asset test,” Timms said at Class Ignite 2024 in Sydney last week.
“At present, we are still waiting for legislation to go through from the 2022 budget announcement to get rid of the active member test, but if the fund is not a resident fund, do you wait for the ATO to tell you that?
“No, that’s actually just a question of fact. It’s different to non-compliance, which is where you will wait for the ATO to issue you with the notice of non-compliance for a particular reason.
“However, if you have a non-resident super fund, you as the tax agent should be determining that, making the decision on the facts that you have and lodging the super fund’s annual tax return accordingly.
“This is not something that we wait for the ATO to pick up on, but is residency kind of difficult to assess? It is sometimes, but do we actually look at it really closely or do we wait for the tax office to do that for us?
“This is one of those little traps that sometimes pop up in relation to the residency side of things.”
In the same presentation, she also noted many people were incorrectly applying the CMC test during an absence from Australia when it is meant to be applied at the time of departure, which could result in an SMSF member being considered as a non-resident even if they had returned within the two-year period set out in the process.
