Non-resident SMSF

[petey]

Does anyone have advice on managing a SMSF while residing overseas?

For those who don't know, if you are becoming a non-resident, your SMSF can be taxed on 46.5% of income and assets.

As far as I understand it, there are two options:
- Visit Australia for more than 28 days every 2 years; or
- Convert the Fund to a Small APRA Fund by appointing an approved trustee.

It seems to me that the most thorough solution is to set up a Small APRA Fund however the second challenge begins - keeping it affordable. As it stands, we would only have around $70,000 in super, so management fees need to be kept low.

Has anyone been through this process?

 

[redwood]

Hi Petey,

Good question and one that many of our clients encounter in either setting up a SMSF or running an SMSF. The first point is it will depend on your personal circumstances, and how much time you are overseas to satisfy the residency test, and seek advice please before you pack your bags up and wind up the SMSF.

Few options:
1. ignore it: DONT - this has major tax consequences for your fund
2. apply the central management and control test
3. Appoint a power of attorney - seek advice
4. Wind up the fund
5. Move to Small APRA

There are a number of considerations here obviously including SIS considerations (trust deed), tax compliance and administration costs.

Hope this helps!

Cheers, Ivan

 

[Caput Lupinum]

Let me know what you come up with Petey. This is something that I will need to find the answer for when the time comes.

 

[bricklayer]

Hi petey (or anyone else!),

Have you found out more about this?

 

[petey]

Hi petey (or anyone else!),

Have you found out more about this?

Unfortunately no, the options seem somewhat limited.

At this point in time I believe the best option is to join a Small APRA Fund, which obviously limits your control and depending on how you are set up, can make the costs too high.

I'm fairly young, so don't have a lot in my super, so unless I can find a very low cost Small APRA Fund (not finding much unfortunately), it's probably not worth it.

 

[goldpelican]

There is also the retiree savings accounts (RSA) which is analogous to a cash-only SMSF.

 

[petey]

Just checking in to see if anyone has come across viable alternatives? I haven't had any luck finding an affordable way to run a Small APRA fund for younger singles/couples with small deposits.

I want control of my Super but it's looking like I may have to forego some of this control and use something like the ING Living Super service: http://www.ingdirect.com.au/superannuation/living-super/compare-investments.html

 

[redwood]

Just checking in to see if anyone has come across viable alternatives? I haven't had any luck finding an affordable way to run a Small APRA fund for younger singles/couples with small deposits.

I want control of my Super but it's looking like I may have to forego some of this control and use something like the ING Living Super service: http://www.ingdirect.com.au/superannuation/living-super/compare-investments.html

Hi Petey, not sure if we discussed your situation personally, however how long are you heading overseas for? depending on time you can appoint a power of attorney, key point are you going for more than 2 years?

Cheers, Ivan

 

[Caput Lupinum]

Is there such a thing as a corporate trustee service available where I can give a company power of attorney but am able to control my SMSF remotely; e.g still invest my super in anyway I want (share trading, buy PMs, term deposit of my choosing) but the company holds all my documentation for the purpose of keeping records and for auditing? If all things go to plan I intend on moving overseas permanently in 2-3 years time but I don't want to have to move my super back into a retail superfund where it will slowly be eaten away by fees.

 

[petey]

Just checking in to see if anyone has come across viable alternatives? I haven't had any luck finding an affordable way to run a Small APRA fund for younger singles/couples with small deposits.

I want control of my Super but it's looking like I may have to forego some of this control and use something like the ING Living Super service: http://www.ingdirect.com.au/superannuation/living-super/compare-investments.html

Hi Petey, not sure if we discussed your situation personally, however how long are you heading overseas for? depending on time you can appoint a power of attorney, key point are you going for more than 2 years?

Cheers, Ivan

Short term plan is up to 2 years. Long term plan is ultimately to become a permanent non-resident.

CL, what you have suggested is pretty much what I am looking for. The catch is that it needs to be low cost otherwise it defeats the purpose. From what I understand, low cost and corporate trustee shouldn't be used in the same sentence.

 

[redwood]

Hi Petey and CL,

Re non-resident SMSF where I refer to POA, it will depend on your intention in leaving Australia.

It can be central management and control in Australia if your NOT leaving Australia permanently and for less than 2 years and it may be possible in certain circumstances to be eligible even though you are leaving permanently. This comes down to 'intention' of the stay and duration of the stay in the overseas country (i.e are you leaving permanently?)

This requires careful planning, and usually require a power of of attorney for the management and control of your SMSF. There are a couple of Silverstacker clients who have employed a POA which is covered in SMSFR2010/2 (http://law.ato.gov.au/atolaw/view.htm?DocID=SFR/SMSFR20102/NAT/ATO/00001&PiT=99991231235958). Obviously be careful who you appoint as POA....one forum member used his mother and another a mate.

Its important to understand that while you are overseas you cannot contribute to the fund.

Hope that helps

Cheers, Ivan