The number of SMSF’s in Australia is growing every year. The reason this type of retirement fund is so popular is the fact that every member is also a trustee and has the full control over the fund. Members are responsible for managing the fund and deciding on the investment strategy and where the fund money will be invested. Also, members must ensure the SMSF is always in compliance with the rules and regulations of the Australian Taxation Office (ATO).
To ensure your SMSF is already in compliance there are certain rules that need to be followed. If you have no time to get familiar with important ATO rules, it is best to hire a professional accountant. But even if you do hire an expert, it is recommended to get familiar with at least some of the more important rules, such as the SMSF residency rules. SMSF residency rules need to be respected and followed in order for the SMSF to be managed right and to avoid high tax penalty.
Here are the SMSF residency rules that must be followed to be in compliance with ATO.
Rule No.1 – Established in Australia – The first SMSF residency rule is that the superannuation fund must to be established in Australia. Also, every asset of the SMSF needs to be established and kept in Australia.
Rule No.2 – Central Control And Management – The control and management of an established SMSF must be done in Australia. Put in other words, this SMSF residency rule states that the fund can only be reviewed and updated from Australia. Also, all investment decisions can be made only if the member is in Australia.
Rule No.3 – Contributions – There are few SMSF residency rules about the image of an active member – a member who makes real contributions to the SMSF. This rule is satisfied if no actual contributions are made by the members of SMSF during the time when one member of the fund is working or living overseas. To make contributions while one of the fund members is not in Australia, please hire a professional accountant.
