A superannuation specialist has reminded practitioners a rollover made into an SMSF by a member who at the time of the transaction is overseas and a non-resident for tax purposes will be treated as a contribution to the fund with regard to the residency test.
Accurium superannuation adviser Natalie Scott said this treatment is very important as the rollover will make the individual involved an active member of the SMSF.
“For the purposes of the active member test a rollover is considered [to be] a contribution which is unusual I know and generally you wouldn’t think it would [receive such treatment],” Scott told attendees of an Accurium technical webinar held today.
Further she pointed out, if the vehicle is not a single member fund, the trustees of the SMSF in question will then have to ensure the fund complies with section 295.95(2)(c)of the Income Tax Assessment Act 1936.
To this end she stipulated they must ensure the total market value of the fund’s assets attributable to active members or the sum of amounts that would be payable to active members relates to interests held by active members who are Australian residents.
According to Scott it makes the timing of any rollovers into an SMSF while a member is overseas critical in terms of the residency test, particularly when an individual is contributing to a public offer fund for the duration of their offshore stay with the intention of transferring those monies into their SMSF upon returning to Australia.
“If you decide to move overseas and you’re not making contributions to the SMSF, but [you are] making contributions to an APRA (Australian Prudential Regulation Authority) regulated fund, the rollover [of those benefits into the SMSF] needs to happen once you move back and become a resident of Australia for tax purposes,” she suggested.
“If you [make the] rollover when you are still a non-resident [of Australia] for tax purposes then you’ll be considered a contributor to the fund and the fund will fail the active member test unless you’ve got [a member] who is an Australian resident and has got more than 50 per cent of the [fund’s] assets attributable to them,” she concluded.
