An important reminder about compliance with SMSF residency rules.

Cameron S Hemming, National Business Development Manager

The rapid take up of SMSFs requires a greater need for trustee awareness of their responsibilities to ensure their SMSF is compliant with the SIS Act. From my experience in speaking to customers on the Cleardocs helpdesk, it has become apparent that SMSF trustees are hazy about the compliance requirements where the SMSF residency rules are concerned.

This got me thinking about how easy this area of SMSF trustee obligations is to get wrong. With globalisation and the Global Financial Crisis (GFC) many people have needed to look internationally for employment. A temporary move overseas for work can quite easily lead to being outside of Australia for 2 or more continuous years — for a trustee (or director of the trustee) of an SMSF this can result in the ATO deeming the SMSF non-compliant.

As Paul Ellis from Maddocks states in a ClearLaw article, the recent changes to the residency rules for an SMSF means that trustees have to take action on their SMSF if they plan to go offshore to live for any considerable time.

“Superannuation professionals and SMSF trustees must be conscious of the residency trap and take the time to structure a plan to manage SMSFs appropriately during any extended overseas stay by SMSF trustees and members. Recent changes make the trap harder to avoid”.

To understand what changes have been made to the SMSF residency rules, please read Paul’s ClearLaw article http://www.cleardocs.com/clearlaw/superannuation/changes-smsf-residency.html

Additionally, to understand the drastic effects of having a non-compliant fund, Nicole Siemensma has written a ClearLaw bulletin summarising a recent case - CBNP Superannuation Fund v Commissioner of Taxation – in which the trustee failed to meet their obligations under the SMSF residency rules, see https://www.cleardocs.com/clearlaw/superannuation/smsf-residency-rules.html

To learn more about your SMSF trustee obligations with regard to SMSF residency rules you should review the ATO web site, www.ato.gov.au, and contact your lawyer or call Cleardocs on 1300 307 343 and we will arrange for you to speak with one of the lawyers at Maddocks.