SMSF audience guide
SMSF for Australian expats: residency, contributions and the central management & control test
Australian expats can keep an SMSF while living overseas — but you have to navigate the residency tests carefully. A non-complying SMSF loses concessional tax treatment and can trigger a 47% tax hit on the entire balance.
Why Australian expats use an SMSF
An SMSF must satisfy three tests in section 295-95(2) of the ITAA 1997 to be Australian for tax purposes: it must be established in Australia, its central management and control must ordinarily be in Australia, and at least 50% of its active member balances must belong to Australian residents.
The trickiest one for expats is central management and control. The ATO allows a 2-year temporary absence safe harbour, and beyond that you can appoint an enduring power of attorney resident in Australia to step into your trustee role. Get this wrong and the fund becomes non-complying — taxed at 47% on assessable income and total fund value.
- Pass the SIS Act's three residency tests: establishment, central management & control, active member
- Use the 2-year temporary absence safe harbour for central management & control
- Pause contributions if you'll be away long-term and the active member test would fail
- Appoint an enduring power of attorney resident in Australia
- Cross-border tax planning before you leave — and before you return