Michael Hallinan

The ATO has confirmed the long held view that a rollover/benefit transfer to an SMSF in respect of a member will be treated as a contribution for the purpose of applying the active member test.

This test is one of three tests which is used to determine whether a complying superannuation fund has lost its residency status and transformed from an Australian superannuation fund to a non-resident superannuation fund.  The loss of residency status will cause a special tax to be imposed on the fund at the rate of 47% on the asset value of the fund (less undeducted contributions).

In short, once a member of an SMSF becomes a non-resident – no contributions, rollovers or benefit transfers by or in respect of the member should be received by the SMSF.

If not, the SMSF may fail the active member test and therefore cease to be a complying superannuation fund.

By Michael Hallinan – Special Counsel at Townsends Business & Corporate Lawyers

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