Smsf And Outgoing Expats

SMSF and Outgoing Expats

by

James Keyes

Australian s working offshore has presented some challenges since the last budget. In the last Federal Budget, the government made changes to s. 23AG which used to exempt the employment income of Australian tax residents working offshore for more than 90 days from Australian income tax. That income is now taxable albeit with a foreign tax credit for any foreign tax paid on the employment income. As a result of this change, some Australians who work overseas but remain residents for tax purposes will now have to go to the next level and become non-residents for tax purposes if they do not wish to pay tax in Australia on their foreign employment income.

However for a resident with an SMSF this present some challenges and may mean rolling over the assets into a public fund or handing over control to an attorney.

For many Australian expats, one of the most urgent issues is whether they can use or maintain a self managed superannuation fund ( SMSF ). To be a complying fund, a superannuation fund must be an Australian superannuation fund . In other words, unless a fund meets the definition in the tax legislation, the fund and its members will not enjoy any of the concessional tax treatment that applies to superannuation in Australia.

This is extremely important as moving overseas and changes to your residency status can mean changes to your SMSF without you even realising so.

What happens if I get it wrong ?

If a fund does not meet the definition of an Australian Superannuation Fund based on the requirements set out in Australian tax legislation then the fund will lose its concessional tax treatment and the members will also lose many of the benefit. However the worst thing is that if the SMSF ceases to be complying then the market value of the assets need to be included in the income of the fund and taxed at the top marginal rate. Very nasty.

Give Omega Partners Accountants in Sydney a call on (02) 8211 0429 if you are moving overseas or spending a significant amount of time overseas and you have an SMSF. Getting it wrong could be disasterous.

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Article Source:

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