Non-Tax Residency and Your SMSF: What Every Trustee Needs to Know

As more Australians move overseas for work, lifestyle, or investment, one question becomes critical:
👉 What happens to your SMSF if you become a non-tax resident of Australia?

Whether you’re planning to relocate or already living abroad, your Australian tax residency status can have a significant impact on your Self-Managed Super Fund (SMSF).

In this article, we’ll cover:

• ✅ Why residency status matters for SMSFs

• 🔍 What the ATO requires for SMSF compliance

• ⚠️ Risks of getting residency wrong

• 💡 Practical solutions for SMSF members becoming non-residents

• 🛡️ How iCare SMSF can help

✅ Why Does Tax Residency Matter for SMSF Members?

To maintain your SMSF’s complying status, you must meet strict Australian residency requirements. If your fund becomes non-compliant, it could be taxed at 47% on all assets — a costly mistake.

Key ATO Conditions:

1. The SMSF must be established in Australia

2. The fund must remain an Australian super fund

3. It must meet the ‘active member test’ or the ‘central management and control’ test

If you (as a trustee or director of a corporate trustee) become a non-resident, it could trigger a residency breach — unless managed correctly.

🔍 ATO Residency Tests for SMSF Compliance

To keep your SMSF compliant while you’re overseas, your fund must pass the following tests:

1. Central Management and Control (CMC) Test

This means the strategic decisions of the SMSF (investment choices, administration, compliance) must be made mainly in Australia.

📌 You can be overseas temporarily (up to 2 years) — but not indefinitely.

2. Active Member Test (if applicable)

More than 50% of the SMSF’s contributions and assets must relate to members who are Australian residents.

📌 If no contributions are made while you’re overseas, this test may be irrelevant.

⚠️ What Happens If You Get It Wrong?

If your SMSF fails the residency tests while you’re a non-tax resident, the fund may become non-complying, and:

• Be taxed at 47% on its net assets and income

• Lose concessional tax treatment

• Be forced into wind-up or rollover to an APRA fund

This often happens when people move offshore without planning their SMSF residency in advance.

💡 Practical Solutions for SMSF Members Becoming Non-Residents

At iCare SMSF, we work with clients who want to keep or exit their SMSF when moving overseas. Here are common strategies:

✔️ 1. Appoint a Power of Attorney in Australia

You can delegate control of the fund to someone in Australia to maintain CMC in Australia. This must be done before becoming a non-resident.

✔️ 2. Convert to a Small APRA Fund (SAF)

SAFs are regulated by APRA, not the ATO. You can:

• Appoint a professional trustee

• Retain super while overseas

• Avoid SMSF residency compliance issues

✔️ 3. Wind Up the SMSF and Roll Into a Retail/Industry Fund

If you no longer want the responsibility or compliance risks, iCare SMSF can help you:

• Liquidate assets

• Finalise reporting

• Roll over benefits tax-effectively

✔️ 4. Plan for Temporary Absences

If your time overseas is less than 2 years and your intention is to return, you may be able to maintain your SMSF without restructuring — but documentation is key.

🛡️ How iCare SMSF Can Help

We specialise in supporting trustees who are transitioning to non-residency and want to protect their SMSF assets. Our services include:

• ✅ Pre-departure SMSF review and planning

• ✅ Power of attorney setups and trustee restructuring

• ✅ Wind-up support or conversion to SAF

• ✅ Tax residency assessments

• ✅ Liaising with the ATO for clarification or rulings

✈️ Moving Overseas? Don’t Risk Your SMSF

Your Australian tax residency status doesn’t just affect your personal taxes — it can jeopardise your entire super fund. If you’re becoming a non-resident, take proactive steps to protect your SMSF.

📞 Contact iCare SMSF today for expert, personalised advice on SMSF residency, exit strategies, and cross-border compliance.