Edited version of your written advice

Authorisation Number: 1012664259296

Ruling

Subject: Residency of Self-Managed Superannuation Fund

Questions

1. Are Taxpayer 1 and Taxpayer 2 residents of Australia for taxation purposes?

2. Is the superannuation fund an Australian superannuation fund as defined in subsection 295-95(2) of the Income Tax Assessment Act 1997 for the 2011-12, 2012-13, 2013-14 and 2014-15 income years if both members reside temporarily overseas to look after their respective aged parent until they pass away?

Answer

1. No.

2. No.

This ruling applies for the following period:

Year ending 30 June 2012

Year ending 30 June 2013

Year ending 30 June 2014

Year ending 30 June 2015

The scheme commences on:

1 July 2011

Relevant facts and circumstances

The superannuation fund (the Fund) is a self-managed superannuation fund (SMSF).

Company A is the Trustee of the Fund. Taxpayer 1 and Taxpayer 2 are the Directors of the Trustee (Trustee Directors).

The Trustee Directors are also the members of the Fund.

The Fund was established by deed during the 20XX-0Y income year.

The Trustee Directors were born in an overseas country.

The Trustee Directors became citizens of Australia during the 20XX-0Y income year.

The Trustee Directors are citizens of both Australia and the overseas country.

The Trustee Directors departed Australia in during the 20AA-BB income year, travelling to the overseas country for a holiday.

While the Trustee Directors were in the overseas country it became apparent that Taxpayer 1's parent required admission to a care facility. No vacancies existed for suitable facilities so they chose to remain in the overseas country and provide home care for Taxpayer 1's parent.

Taxpayer 1's parent was admitted to a care facility during the 20AA-BB income year.

While caring for Taxpayer 1's parent, Taxpayer 2's parent became ill and was admitted to the care facility. Taxpayer 2's parent is still in care.

Taxpayer 1 and Taxpayer 2 intend to remain in the overseas country until Taxpayer 2's parent passes away.

While in the overseas country Taxpayer 1 and Taxpayer 2 live in the family home owned by the family trust.

Taxpayer 1 returned to Australia on the following occasions:

• For three weeks during the 20CC-DD income year to:

• Meet the previous accountants and auditors and appoint the new accountants and tax agents of the Fund and other family interests. Taxpayer 1 also arranged the hand-over of all related documents to the new accountants.

• Revive their family company by changing the name (Company B), appointing a director and shareholder, appointing a non-executive Australian resident director, meet with an organisation to get accreditation, and attend a board meeting and agree on a business plan for the new year.

• During the 20DD-EE income year to attend Taxpayer 2's child's graduation at an Australian tertiary education institution and to meet the new accountants to discuss the Fund.

Taxpayer 2 returned to Australia on the following occasions:

• During the 20AA-BB income year Taxpayer 2 returned home to Australia. During the 20AA-BB income year a decision was made to return to the overseas county to assist in the care of Taxpayer 1 and Taxpayer 2's parents. At this time Taxpayer 2 arranged storage of house contents and letting agents.

• During the 20DD-EE income year to attend their child's graduation at an Australian tertiary education institution.

The Trustee Directors own a dwelling in Australia that is rented out while they are living in the overseas country.

Both taxpayers have assets in the overseas country including cars, a credit card, joint bank accounts, and shares in an overseas company.

The Trustee Directors have assets in Australia including a rental property, bank accounts, and furniture in storage.

In meeting minutes of Company B it states that Taxpayer 1 is now classified as a non-resident Australian Citizen as Taxpayer 1 resides in the overseas country.

The Trustee Directors advised the Australia Electoral Commission of their change of address but are still on the electoral roll and voted in the last election at the Australian Embassy in the overseas country.

During the 20CC-DD income year the Trustee Directors advised the Australian bank of being non-residents of Australia.

The Trustee Directors advised Medicare and Medibank of their temporary absence from Australia.

The Trustee Directors have not been Commonwealth Government of Australia employees and are not contributing members of related superannuation schemes.

During the 20BB-FF income year, both taxpayers were under 65 years of age.

Over several years the Fund has received contributions, undertook investments and satisfactorily completed its annual accounts and income tax returns.

The last accounts and income tax return prepared and lodged for the Fund were for the 20BB-FF income year.

The strategic and high level decision making processes and activities of the fund are made by the Trustee Directors with assistance from an accountant.

With a view to closing the Fund prior to 30 June 20FF, the Trustee Directors instructed a share broker, during the 20BB-FF income year, to liquidate the Fund's share portfolio. The 30 June 20FF accounts show that these instructions were carried out during the 20BB-FF income year and all investments were liquid, cash, as at year end.

The Trustee Directors have already had discussions in a Skype call during the 20BB-FF income year with their previous accountant/tax agent regarding the closure of the Fund. In that discussion, they indicated their desire to 'close off' the Fund. They identified that one of the issues is the determination of Taxpayer 2's balance in order to transfer this amount to a 'normal' (i.e. retail) fund. The Trustee Directors seek assistance from their previous accountant/tax agent and highlight the 'challenge' of managing this 'from a distance'.

Since the decision has been made at this point to close the Fund and Taxpayer 1 has met a condition of release, Taxpayer 1's balance was converted to pension phase (effective 1 July 20FF) prior to making the following payments to Taxpayer 1, thus clearing Taxpayer 1's entire member balance.

Taxpayer 1 meets a condition of release for their superannuation benefits as follows:

• Taxpayer 1 is past their preservation age;

• Taxpayer 1 was both technically and practically retired from gainful employment in Australia for several years during the 20BB-FF income year; and

• Taxpayer 1 had no intention to return to work in Australia before their 65^th birthday.

In an e-mail from Taxpayer 1 to their accountants during the 20BB-FF income year stated:

I am keen to get the Super Fund closed off. As discussed last week I need to transfer [Taxpayer 2's] portion into a normal Super Fund. Please advise the amount that is due to [Taxpayer 2] and how we manage the paper work from a distance?

In an e-mail from Taxpayer 1 to their accountants during the 20FF-CC income year stated:

… As we discussed this is the last year for the Fund which we must shut down & finalise the distribution by 30 June 20CC…

Despite this instruction, Taxpayer 2's balance was neither transferred to another fund nor paid out during the 20FF-CC income year.

During the 20CC-DD income year an amount was transferred to a superannuation trust being an estimate of the amount required to rollover Taxpayer 2's balance after leaving sufficient funds to finalise the administration of the Fund.

During the 20DD-EE income year an amount was paid for accounting services.

During the 20DD-EE income year an amount was rolled over to Taxpayer 2's account with the superannuation trust being the closing balance of the Fund bank account.

The contribution amounts attributable to the members for the period from 1 July 20BB to 30 June 20CC are as follows:

Taxpayer 1

Nil

Taxpayer 2

20BB-FF- Non concessional contributions

20FF-CC - Government Co-contributions

Employer sponsored contribution

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 Subsection  295-95(4).

Income Tax Assessment Act 1997 Subsection 995-1(1).

Income Tax Assessment Act 1936 Subsection 6(1).

Reasons for decision

Issue 1

Residency status of the individual members

Summary

Taxpayer1 and Taxpayer 2 are not considered to be residents of Australia for taxation purposes from the commencement of the 20FF-CC income year until they return to Australia.

Reasons for decision

An Australian resident for tax purposes is defined in subsection 995-1(1) of the Income Tax Assessment Act 1997 (ITAA 1997) as a person who is a resident of Australia for the purposes of the Income Tax Assessment Act 1936 (ITAA 1936). The terms resident and resident of Australia, in regard to an individual, are defined in subsection 6(1) of the ITAA 1936, which provides four tests to ascertain whether a taxpayer is an Australian resident for income tax purposes.

These tests are:

(a) The resides test;

(b) The domicile test;

(c) The 183 day test; and

(d) The superannuation test.

The first two tests are examined in detail in Taxation Ruling IT 2650 'Income Tax: Residency - Permanent place of abode outside Australia'.

The primary test for deciding the residency status of an individual is whether the individual resides in Australia according to the ordinary meaning of the word resides. However, where an individual does not reside in Australia according to ordinary concepts, they may still be considered to be an Australian resident for tax purposes if they satisfy the conditions of one of the three other tests.

The resides test

The resides test considers whether an individual is residing in Australia according to the ordinary meaning of the word 'reside'. The ordinary meaning of the word 'reside', according to the Macquarie Dictionary, 2001, rev. 3^rd edition, The Macquarie Library Pty Ltd, NSW, is 'to dwell permanently or for a considerable time; having one's abode for a time', and according to the Compact Edition of the Oxford English Dictionary (1987), is 'to dwell permanently, or for a considerable time, to have one's settled or usual abode, to live in or at a particular place'.

Taxation Ruling TR 98/17 Income tax: residency status of individuals entering Australia discusses the factors that are taken into account in assessing whether an individual's behaviour is consistent with residing in Australia.

Taxpayer 1 is living in the family home in the overseas country and has been since the 20AA-BB income year. Since that time Taxpayer 1 has twice returned to Australia for short periods in 2013. Taxpayer 1 is residing in the overseas country under the ordinary meaning of the word 'reside' and accordingly is not a resident of Australia for tax purposes under this test.

Taxpayer 2 is also living in the family home in the overseas country and has been since the 20AA-BB income year. Since that time the taxpayer has returned to Australia once in 20DD. Taxpayer 2 is residing in the overseas country under the ordinary meaning of the word 'reside' and accordingly is not a resident of Australia for tax purposes under this test.

The domicile test

Under the domicile test, a person is a resident of Australia if their domicile is in Australia unless the Commissioner is satisfied they have a permanent place of abode outside of Australia.

'Domicile' is a legal concept to be determined according to the Domicile Act 1982 and common law rules. The courts have defined it as the legal relationship between a person and a territory subject to a distinctive legal system that invokes that system as the individual's personal law (Henderson v Henderson [1965] 1 All ER 179 at 180-181).

A person's domicile is in their country of origin unless they acquire a different domicile of choice or operation of law. To obtain a different domicile of choice, a person must have the intention to make their home indefinitely in another country, usually done by obtaining a migration visa. The domicile of choice which a person has at any time continues until that person acquires a different domicile of choice.

Both Taxpayers' domicile of origin is the overseas country. They acquired a new domicile of choice in Australia when they elected to become Australian citizens and reside in Australia permanently. They did not acquire a new domicile of choice by residing in the overseas country for the purpose of caring for their parents.

The leading authority on the meaning of 'permanent place of abode' is Federal Commissioner of Taxation v Applegate (1979) 38 FLR 1; (1979) 27 ALR 114; (1979) 9 ATR 899; (1979) 79 ATC 4307; [1979] FCA 66 (Applegate), which says that a person's 'permanent place of abode' is a question of fact to be determined in the light of all the circumstances of each case. In Applegate, the court found that 'permanent' does not mean everlasting or forever but it is to be contrasted with temporary or transitory.

The courts have considered 'place of abode' to refer to a person's residence, where he lives with his family and sleeps at night.

In Applegate, Fisher J made the following comments when analysing the expression 'permanent place of abode':

To my mind the proper construction to place upon the phrase 'permanent place of abode' is that it is the taxpayer's fixed and habitual place of abode. It is his home, but not his permanent home. It connotes a more enduring relationship with the particular place of abode than that of a person who is ordinarily resident there or who has there his usual place of abode. Material factors for consideration will be the continuity or otherwise of the taxpayer's presence, the duration of his presence and the durability of his association with the particular place.

The Administrative Appeals Tribunal in Dempsey v Commissioner of Taxation [2014] AATA 335; (2014) 2014 ATC 10-363 found that the taxpayer had established a permanent place of abode overseas, despite having a home unrented and available to him in Australia and being required to renew work visas annually.

Taxpayer 1 has been living in the overseas country for several years and it is likely that they will be there for a further year. In this time:

• Taxpayer 1 is living in their family home and continuing the same or similar work to that which Taxpayer 1 performed in Australia;

• Taxpayer 2 has moved to the overseas country with Taxpayer 1;

• Taxpayer 1 rented out their home in Australia;

• lived in the overseas country in a manner similar to that in which Taxpayer 1 ordinarily lived in Australia.

Taxpayer 2 has been living in the overseas country for several years and it is likely that they will be there for a further year. In this time:

• Taxpayer 2 is living in their family home;

• Taxpayer 1 has moved to the overseas country with Taxpayer 2;

• Taxpayer 2 rented out their home in Australia;

• lived in the overseas country in a manner similar to that in which Taxpayer 2 ordinarily lived in Australia.

Although the majority of both taxpayers' assets are located in Australia, this is not determinative or a necessarily heavily weighted factor in finding they have a permanent place of abode in Australia.

Based on the reasons discussed above, the Commissioner is satisfied that both taxpayers have a permanent place of abode in the overseas country. Therefore, Taxpayer 1 and Taxpayer 2 are not residents of Australia under this test.

The 183 day test

When a person is present in Australia for 183 days or more during the year of income the person will be a resident, unless the Commissioner is satisfied that the person's usual place of abode is outside Australia and the person does not intend to take up residence in Australia.

Taxpayer 1 and Taxpayer 2 do not satisfy this test as they have not and will not spend 183 days or more in Australia in any financial year.

The superannuation test

An individual is still considered to be a resident if that person is eligible to contribute to the Public Service Superannuation Scheme (PSS) or the Commonwealth Superannuation Scheme (CSS), or that person is the spouse or child under 16 of such a person.

Neither taxpayer are contributing members of the PSS or CSS. Further, they are over 16 years of age. Therefore, Taxpayer 1 and Taxpayer 2 are not residents under this test.

Your residency status

Taxpayer 1 and Taxpayer 2 are not residents of Australia for taxation purposes from the commencement of the 20FF-CC income year until they return to Australia.

Issue 2

Residency status of the superannuation fund

Summary

For the Fund to be an Australian superannuation fund at a particular time it must meet all the requirements of the income tax legislation. That is, it must satisfy:

• the established in Australia test;

• the central management and control test; and

• the active member test.

It has been determined that the Fund does not satisfy the central management and control test. Accordingly, the Fund not be an Australian superannuation fund during the period that the members are absent from Australia.

Detailed reasoning

Subsection 295-95(2) of the ITAA 1997 defines what is an Australian superannuation fund and provides that:

A superannuation fund is an Australian superannuation fund at a time, and for the income year in which that time occurs, if:

(a) the fund was established in Australia, or any asset of the fund is situated in Australia at that time; and

(b) at that time, the central management and control of the fund is ordinarily in Australia; and

(c) at that time either the fund had no member covered by subsection (3) (an active member) or at least 50% of:

(i) the total market value of the fund's assets attributable to superannuation interests held by active members; or

(ii) 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 'Income tax: meaning of Australian superannuation fund in subsection 295-95(2) of the Income Tax Assessment Act 1997'.

TR 2008/9 represents the views of the Commissioner and sets out the Commissioner's interpretation of the definition of Australian superannuation fund.

Test One: Fund established in Australia or any asset of the fund is situated in Australia

The first test that a superannuation fund must satisfy to be an Australian superannuation fund at that time is that the fund was either established in Australia, or any asset of the fund is situated in Australia at the relevant time. This is a question of fact.

The establishment of the fund requirement in paragraph 295-95(2)(a) of the ITAA 1997 is a once and for all requirement. That is, once it is determined that a fund was established in Australia, it will satisfy the first test at all relevant times.

In the present case, the Fund was established in Australia. Therefore, the requirement under paragraph 295-95(2)(a) of the ITAA 1997 has been satisfied.

Test Two: The central management and control of the fund is ordinarily in Australia

The second test, and one of the key requirements that a superannuation fund must satisfy to be an Australian superannuation fund at a particular time, is that the central management and control (CM&C) of the fund is ordinarily in Australia. Generally, the location of where important decisions are made is the location of the relevant management and control.

The concept of CM&C is not defined in the ITAA 1997 or in the Income Tax Assessment Act 1936 (ITAA 1936). In addition, the Explanatory Memorandum to the Superannuation Legislation Amendment (Simplification) Act 2007 (which inserted section 295-95 of the ITAA 1997) does not provide any guidance as to its meaning. Therefore it must be given its ordinary or common law meaning. The policy intention of the amendment was to simplify the scope of the superannuation fund residency definition and give effect to a minor policy change in respect of the application of the CM&C test.

The concept of CM&C was developed by the courts as a common law rule for determining the residence of a company.

To determine the location of the CM&C of a fund at a point in time, it is necessary to consider what constitutes the CM&C of a fund and who it is that exercises the CM&C of a fund.

The CM&C of a superannuation fund involves the focus on the who, when and where of the strategic and high level decision making processes and activities of the fund. In the context of the operations of a superannuation fund, the strategic and high level decision making processes includes the performance of the following duties and activities:

• formulating the investment strategy for the fund;

• reviewing and updating or varying the fund's investment strategy as well as monitoring and reviewing the performance of the fund's investments;

• if the fund has reserves the formulation of a strategy for their prudential management; and

• determining how the assets of the fund are to be used to fund member benefits.

Establishing who is exercising the CM&C of the fund is a question of fact to be determined with reference to the circumstances of each case. While it is the trustee of the fund which has the legal responsibility or duty to exercise the CM&C of a superannuation fund, the mere duty to exercise CM&C does not, of itself, constitute CM&C. If the trustee in fact performs the high level duties and activities of the fund, they will be exercising the CM&C of the fund in practice.

Paragraph 26 of TR 2008/9 states:

The trustee of a fund may seek external advice relating to the performance of their high level duties and activities. Provided that the trustee in fact makes the strategic and high level decisions for the fund, the circumstance that the trustee acts on or is influenced by such advice does not affect the fact that the trustee is exercising the CM&C of the fund.

However, there may be situations where a person other than the trustee is exercising the CM&C of the fund. If a person other than the trustee of the fund independently and without any influence from the trustee performs those duties and activities that constitute the CM&C of the fund, that person is exercising the CM&C of the fund.

Location of the CM&C

The location of the CM&C of the fund is determined by where the high level and strategic decisions of the fund are made and high level duties and activities are in fact performed. Thus, if the trustees of the fund ordinarily reside overseas (notwithstanding that they may be Australian residents for income tax purposes) then, unless there is evidence to the contrary, the conclusion would be that the CM&C of the fund is overseas.

Whether the CM&C of a fund is ordinarily in Australia at a particular time is to be determined by the relevant facts and circumstances of each case. It involves determining whether, in the ordinary course of events, the CM&C of the fund is regularly, usually or customarily exercised in Australia. There must be some element of continuity or permanence if the CM&C of the fund is to be regarded as being ordinarily in Australia.

Company A is the Trustee of the Fund. Taxpayer 1 and Taxpayer 2 are the Directors of the Trustee (Trustee Directors). The Trustee Directors are involved in the strategic and high level decision making processes and activities of the fund. There is no evidence to indicate that the CM&C was or will be exercised by another person during the Trustee Directors' absence from Australia. On the facts provided, it is reasonable to conclude that the CM&C will continue to be exercised by the Trustee Directors.

Paragraphs 28 to 34 of Taxation Ruling TR 2008/9 discusses where the CM&C of a fund is located and, in particular, where it is located when the fund trustees are temporarily absent from Australia as follows:

When is the CM&C of the fund 'ordinarily' in Australia

28. Whether the CM&C of a fund is ordinarily in Australia at a particular time is to be determined by the relevant facts and circumstances of each case. It involves determining whether, in the ordinary course of events, the CM&C of the fund is regularly, usually or customarily exercised in Australia. There must be some element of continuity or permanence if the CM&C of the fund is to be regarded as being 'ordinarily' in Australia. If the CM&C of the fund is being temporarily exercised outside Australia, this will not prevent the CM&C of the fund being 'ordinarily' in Australia at a particular time.

CM&C - temporary absences

29. Subsection 295-95(4) of the ITAA 1997 states:

To avoid doubt, the central management and control of a *superannuation fund is ordinarily in Australia at a time even if that central management and control is temporarily outside Australia for a period of not more than 2 years.

30. The effect of subsection 295-95(4) is to provide one set of circumstances in which the CM&C of a fund will be taken to be 'ordinarily' in Australia at a time for the purposes of paragraph 295-95(2)(b) of the ITAA 1997 (that is, it operates as a 'safe harbour' rule).

31. Subsection 295-95(4) of the ITAA 1997 does not otherwise restrict the meaning of 'ordinarily' so that the CM&C of the fund can only be outside Australia for a period of 2 years or less. If the CM&C of the fund is outside Australia for a period greater than 2 years, the fund will satisfy the CM&C test if it satisfies the 'ordinarily' requirement in paragraph 295-95(2)(b) of the ITAA 1997.

32. While the CM&C of a fund can be outside Australia for a period greater than 2 years, the period of absence of the CM&C must still be temporary. Furthermore, if the CM&C of the fund is not temporarily outside Australia, it will not be 'ordinarily' in Australia at a time even if the period of absence of the CM&C is 2 years or less.

33. The CM&C of a fund will be 'temporarily' outside Australia if the person or persons who exercise the CM&C of the fund are outside Australia for a relatively short period of time and during that time they exercise the CM&C of the fund overseas. The duration of the absence must either be defined in advance or related (both in intention and fact) to the fulfilment of a specific, passing purpose. Whether an absence is considered to be temporary involves consideration of questions of degree which must be decided by reference to the circumstances of each particular case.

34. Whether an absence is temporary must be determined objectively by reference to all the relevant facts and circumstances on a 'real time' basis. That is, it cannot be established in retrospect.

TR 2008/9 advises that the CM&C may be temporarily exercised outside Australia and still be held as being 'ordinarily' in Australia at a particular time. The ruling comments that there must be some element of continuity or permanence. There is a statutory exemption in subsection 295-95(4) of the ITAA 1997 where the absence is for a period of not more than two years. The two year concession is not satisfied in this case so the general principles concerning when the CM&C is ordinarily in Australia apply.

To qualify as a temporary absence (the CM&C still ordinarily in Australia) the ruling states that:

• the persons who exercise the CM&C should only be outside Australia for a relatively short period of time, and

• the duration of the absence must be defined in advance to the fulfilment of a specific, passing purpose.

In this case both Taxpayer 1 and Taxpayer 2 have been living in the family home in the overseas country since the 20AA-BB income year.

TR 2008/9 further advises that whether an absence is considered to be temporary involves consideration of questions of degree which must be decided by reference to the circumstances of each particular case. In this particular situation the following factors do not support the contention of a temporary absence within the terms of TR 2008/9. The factors include:

• Although the Trustee Directors' absence is for a specific, passing purpose of looking after their elderly parents, there is no definite date at which time they will return to Australia.

• It has been determined that Taxpayer 1 and Taxpayer 2 are not residents of Australia for taxation purposes from the commencement of the 20FF-CC income year until they return to Australia.

From the above, it is considered that the CM&C of the Fund is not temporarily outside Australia for the period that the Trustee Directors travel overseas from the commencement of the 20FF-CC income year until they return to Australia, Consequently, the CM&C of the Fund is not considered to be ordinarily in Australia during that period. Therefore, the requirement under paragraph 295-95(2)(b) of the ITAA 1997 has not been satisfied.

Test Three: The active member test

The third test that a fund is required to satisfy to be an Australian superannuation fund is the 'active member' test. Paragraph 69 of TR 2008/9 states:

… The 'active member' test is satisfied if, at the relevant time:

• the fund has no 'active member'; or

• at least 50% of the total market value of the fund's assets attributable to superannuation interests held by active members is attributable to superannuation interests held by active members who are Australian residents (subparagraph 295-95(2)(c)(i) of the ITAA 1997); or

• at least 50% of 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 (subparagraph 295-95(2)(c)(ii) of the ITAA 1997).

From the facts presented, both taxpayers have made some contributions to the fund after they left Australia to go to the overseas country. As such they are active members for the purposes of paragraph 295-95(2)(c) of the ITAA 1997.

In the case of Taxpayer 1, no contributions have been reported to have been made for the 20BB-FF income year onwards. Accordingly, Taxpayer 1 is not an active member for the 20BB-FF income year onwards.

However, in the case of Taxpayer 2, contributions were made by Taxpayer 2 in the 20BB-FF income year and for or on Taxpayer 2's behalf in the 20FF-CC income year. Accordingly, Taxpayer 2 is an active member in those income years.

As Taxpayer 2 has been determined to be a non-resident of Australia for income tax purposes for the 20BB-FF income year until they return to Australia, this results in more than 50% of the total market value of the Fund's assets attributable to superannuation interests held by active members being attributable to superannuation interests held by active members who are not Australian residents.

Therefore, the requirement under paragraph 295-95(2)(c) of the ITAA 1997 has not been satisfied.

For a fund to be considered an Australian superannuation fund all the conditions under subsection 295-95(2) of the ITAA 1997 have to be satisfied.

As some of the requirements under subsection 295-95(2) of the ITAA 1997 have not been satisfied, the Fund is not an Australian superannuation fund.

Conclusion

The members of the Fund, Taxpayer 1 and Taxpayer 2 are not considered to be residents of Australia for taxation purposes for the 20BB-FF income year until they return to Australia.

The Fund is not an Australian superannuation fund as defined in subsection 295-95(2) of the ITAA 1997 from the 20BB-FF income year until the member/directors ultimately return to Australia.