ATO Non-residency case study

The ATO has issued a case study in respect of a self managed superannuation fund not being treated as being non-complying merely because the fund became a non-resident superannuation fund.

While the case study is all well and fine – and the moral of which is – make full and prompt disclosures to the ATO and unless you have done something bad and there are (real) mitigating circumstances – the good fairy of the ATO will make everything right.  Well, sufficiently alright to permit the members of the SMSF to arrange for a winding up of the fund while still retaining its status as a complying superannuation fund.

The interesting aspect of the case study is the inference that the ATO has a discretion as to whether to issue a notice of non-compliance where the fund has become a non-resident superannuation fund.  Previously (it was understood – that is we understood) the position of the ATO was to be that the legislation mandated Australian residency of a superannuation fund as a pre-requisite for the fund to be a complying superannuation fund and the ATO had no power to stop the automatic non-complying status of the fund from arising if the fund ceased to be an Australian resident superannuation fund.

Possibly, Virginia is right and fairy godmothers do exist and actively intervene in our superannuation lives.  Alternatively, it is an administrative indulgence which will not be challenged by anyone and the indulgence is given on condition that the self managed superannuation fund must be wound up.