Private ruling: Residency status of self managed superannuation fund
Published: June 2012
Ruling period: Year ending 30 June 2013
Date scheme commenced: 1 July 2011

Ruling: Q1: Does a roll-over of superannuation benefits into a self managed superannuation fund constitute a contribution for the purposes of subsection 295-95(3) of the Income Tax Assessment Act 1997 ? | A1: Yes.


Relevant legislative provisions: Income Tax Assessment Act 1997 Section 295-95. | Income Tax Assessment Act 1997 Subsection 295-95(2). | Income Tax Assessment Act 1997 Paragraph 295-95(2)(a). | Income Tax Assessment Act 1997 Paragraph 295-95(2)(b). | Income Tax Assessment Act 1997 Paragraph 295-95(2)(c). | Income Tax Assessment Act 1997 Subsection 295-95(3). | Taxation Administration Act 1953 Section Sch1-395-35.

Reasons for decision: Detailed Reasoning - Australian superannuation fund: Subsection 295-95(2) of the ITAA 1997 defines what is an Australian superannuation fund. Subsection 295-95(2) of the ITAA 1997 provides that: A superannuation fund is an Australian superannuation fund at a time, and for the income year in which that time occurs, if: · the fund was established in Australia, or any asset of the fund is situated in Australia at that time; and · at that time, the central management and control of the fund is ordinarily in Australia; and · at that time either the fund had no member covered by subsection (3) (an active member ) or at least 50% of: · the total market value of the fund's assets attributable to superannuation interests held by active members; or · the sum of the amounts that would be payable to or in respect of active members if they voluntarily ceased to be members; · is attributable to superannuation interests held by active members who are Australian residents. There are three tests that a fund must satisfy in order to be treated as an Australian superannuation fund as defined in subsection 295-95(2) of the ITAA 1997. If a fund fails to satisfy any one of the conditions at a particular time, it will not be an Australian superannuation fund at that time, even if it satisfies the other two conditions. The Commissioner of Taxation has issued Taxation Ruling TR 2008/9 entitled Income tax: meaning of Australian superannuation fund in subsection 295-95(2) of the Income Tax Assessment Act 1997 (TR 2008/9). The ruling represents the views of the Commissioner and sets out the Commissioner's interpretation of the definition of Australian superannuation fund. | Detailed Reasoning - Test Three: The active member test: The active member test requires that, where a fund has at least one active member, then the accrued entitlements of Australian resident active members must be 50 per cent or more of the accrued entitlements of all active members of the fund. As defined in subsection 295-95(3) of the ITAA 1997, a member is an active member at a particular time if the member is: · a contributor to the fund at that time; or · an individual on whose behalf contributions have been made, other than an individual: · who is a foreign resident; and · who is not a contributor at that time; and · for whom contributions made to the fund on the individual's behalf after the individual became a foreign resident are only payments in respect of a time when the individual was an Australian resident. The term 'contributor' in the definition of 'active member' is not defined. Therefore, it is to be given its ordinary meaning subject to the context in which it appears. In the case of a superannuation fund, a 'contributor' is an individual who makes a 'contribution' for the purposes of providing for future retirement or superannuation benefits. The concept of a contributor within the context of the active member test is directed at establishing the status of a member as a contributor at a particular point in time, not on the specific act of contributing. TR 2008/9 considers the meaning of 'contribution' and states at paragraph 198: When these provisions are analysed, it is clear that the term 'contribution' has a very broad meaning. Accordingly, when interpreted in the context of the aforementioned provisions in Part 3-30 of the ITAA 1997, 'contributions' in subsection 295-95(3) of the ITAA 1997 would include such amounts as: · direct cash payments made by an employer or an individual to the fund; · a transfer of property (or other asset) to the fund 'in-specie' by an employer or individual; · spouse contributions; | Detailed Reasoning - Government co-contributions;: superannuation guarantee shortfall amounts - these amounts form part of the superannuation guarantee charge collected by the Commissioner and paid to a superannuation fund under the Superannuation Guarantee (Administration) Act 1992 when an employer fails to make sufficient superannuation contributions to a complying superannuation fund or Retirement Savings Account; transfers from the Superannuation Holdings Account Special Account - this occurs when an individual's account balance in the SHASA is transferred to a superannuation fund; a roll-over superannuation benefit - in relation to superannuation funds, this is a superannuation lump benefit paid from one complying fund to another complying fund at the direction of the member; a directed termination payment - these are transitional 'employment termination payments' that an employee directs the employer to pay to a superannuation fund on behalf of the employee; and a superannuation lump sum that is paid from a foreign superannuation fund or an amount transferred to the superannuation fund from a foreign superannuation scheme. From the above it is clear that a roll-over superannuation benefit is a 'contribution'. Therefore, an individual who makes a roll-over superannuation benefit to a superannuation fund will be a 'contributor' and an 'active member' of the receiving superannuation fund at that particular time. You state that your client intends to make a rollover into the Fund. Therefore, your client, in the income year in which he makes the rollover, will be a 'contributor' and an 'active member' of the receiving superannuation fund.

Please check this edited version to be sure that there are no details remaining that you think may allow you to be identified. If you have any concerns about this ruling you wish to discuss, you will find our contact details in the fact sheet. | Relevant facts: Your client has superannuation accounts with Australian institutional superannuation funds. | Your client's superannuation accounts comprise wholly of employer contributions made whilst he was living and working in Australia as an Australian resident. | Your client intends to establish an Australian self managed superannuation fund (the Fund) with his spouse. | Your client and his spouse will be the directors of the corporate trustee of the Fund. | The central management and control of the Fund will be carried out by your client's spouse, who is an Australian resident, in Australia. | Your client is currently working overseas and is not a resident of Australia. | Your client will not be making any contributions to the Fund whilst he is not an Australian resident.