What Happens to My SMSF If I Move Overseas?

If you’re considering a long-term move overseas, you might wonder what will happen to the funds accumulated in your SMSF account throughout your working life. While living overseas, your super fund should remain in Australia, continuing to grow and generating returns on your investment. Your super fund will continue operations as if you were still in the country, even if you have permanently left Australia.

Your superannuation will continue to earn interest and provide financial security for your retirement. If you’re employed by an Australian organization and are deployed overseas, your employer may still contribute to your super even while living abroad.

Australian Taxation Office Guidelines on SMSFs

The ATO has established three primary criteria to determine the residency status of a self-managed superannuation fund in Australia.

The SMSF must have been established in Australia, or at least one of its assets must be in Australia
The SMSF's central management and control, including decision-making, must typically occur in Australia. There is a two-year safe harbour period for individuals temporarily residing outside of Australia, during which they can still meet this requirement
Australian membership: If the SMSF has active contributing members, at least 50% of the SMSF's membership must consist of individuals who are Australian residents

Moving Out of Australia

When moving overseas for an extended period and considering your SMSF, there are several options to explore to ensure compliance and minimise tax implications. Here are some considerations:

Australian-Based Trustee

If you appoint a trustee with the enduring power of attorney, your SMSF can remain eligible while you are overseas. However, you must be willing to relinquish control to a trusted third party. To maintain the “50% rule,” you may need to cease contributing to your SMSF if you are in a two-person fund. Be cautious not to provide investment advice or direction to the trustee, as this could breach the rules.

Wind up the SMSF

If you are unwilling to hand over investment direction to a trustee, winding up the SMSF might be an option, especially if your spouse is also a member and both of you are moving overseas. There are two primary options:

Large Super fund

You can roll your investments into a regular sizeable super fund. However, before doing so, you must sell or transfer your assets, such as real estate, shares, and other investments. Remember that this may trigger capital gains tax, but you could avoid CGT if the fund is paying retirement-phase pensions.

Small APRA Fund

SAFs are limited to a maximum of four members and are run by a licensed trustee. Opting for a SAF can relieve trustee-related stress, but it can be expensive since you would pay the trustee to manage your fund. Like the previous option, you must stop contributing to comply with the “active member” requirement.

Moving to New Zealand

Regarding moving from Australia to New Zealand, the existing restrictions for SMSFs still apply. Although the relationship between the two countries generally facilitates the organization of financial matters, SMSFs face limitations.

It is typically possible to transfer the funds to a New Zealand “KiwiSaver” account for regular superannuation funds, such as APRA funds. If you permanently relocate to New Zealand, you need an Inland Revenue Department number to facilitate this process. Once you have obtained the IRD number, the transfer is relatively straightforward.