ATO Interpretative Decision

ATO ID 2001/592 (Withdrawn)

Superannuation

• This ATO ID is withdrawn from the database because it contains a view in respect of former subsection 6E(1) of the Income Tax Assessment Act 1936 (ITAA 1936) as it operated prior to October 2001. A number of amendments were made to that provision which altered its operation and effect.
  Subsection 6E(1) of the ITAA 1936, which contained the former superannuation fund residency definition, was replaced by subsection 295-95(2) of the Income Tax Assessment Act 1997 with effect from 1 July 2007. The ATO view in respect of the replacement provision can be found in Draft Taxation Ruling TR 2008/D5 Income Tax: meaning of 'Australian superannuation fund' in subsection 295-95(2) of the Income Tax Assessment Act 1997
  This document incorporates revisions made since original publication. View its history and amending notices, if applicable.

Issue

Will a single member superannuation fund be considered a resident superannuation fund in accordance with subsection 6E(1) of the Income Tax Assessment Act 1936 (ITAA 1936) if it appoints the non-resident member of the fund as a trustee of the fund, whilst retaining the current resident trustee as joint trustee?

Decision

Yes, the single member superannuation fund will be considered a resident superannuation fund in accordance with subsection 6E(1) of the ITAA 1936 when the non-resident member of the fund is appointed as joint trustee of the fund.

Facts

(1)

The superannuation fund is a single member fund.

(2)

The member is a non-resident and is currently not an active member for the purposes of subsection 6E(5) (ITAA 1936).

(3)

The current trustee of the superannuation fund is an Australian resident.

(4)

The fund intends to appoint the single member as a joint trustee.

(5)

The current resident trustee will remain as joint trustee and will continue to look after the day to day management of the fund.

Reasons for Decision:

Subsection 6E(1) of the ITAA 1936 establishes the criteria for determining the residency of a superannuation fund.

Subsection 6E(1) (ITAA 1936) requires that:

(a)

the fund is a provident, benefit, superannuation or retirement fund at the relevant time;

(b)

either of the following conditions is satisfied:

(i)

the fund was established in Australia;

(ii)

any asset of the fund at the relevant time is situated in Australia; and

(c)

at the relevant time, the central management and control of the fund is in Australia;

The explanatory memorandum relating to the Taxation Laws Amendment Bill (No. 4) 1994 (which inserted subsection 6E(1)) explains that where a fund has no active members only paragraphs 6E(1)(a) to (c) will need to be satisfied.

There is no definition of the term 'central management and control'. In general terms, the central management and control of the fund will be where its 'real business' is carried on. If the general day to day management and investment decisions of the fund occur within Australia, it will generally be deemed that the central management and control of the fund is in Australia.

As the non-member resident trustee will be looking after the affairs of the fund while the inactive member remains outside of Australia, the central management and control of the fund will be in Australia.

The fund will meet the criteria in subsection 6E(1) of the ITAA 1936 and will be considered to be a resident superannuation fund.

Legislative References:
Income Tax Assessment Act 1936
   subsection 6E(1)
   subsection 6E(5)

Related ATO Interpretative Decisions
ATO ID 2001/591

Other References:
Taxation Laws Amendment Bill (No. 4) 1994 Explanatory Memorandum

Keywords
Self managed superannuation funds
SMSF resident status
SMSF structure
SMSF trustee

Business Line:  Superannuation

Date of publication:  19 November 2001

ISSN: 1445-2782