subscribe to our newsletter
subscribe to our newsletter

Townsends issues reminder on active member test

23 September 2014 — 1 minute read

Townsends Business & Corporate Lawyers has reminded SMSF practitioners of a recent ATO decision related to the active member test.

Michael Hallinan, Townsends Business & Corporate Lawers special counsel for superannuation, said late last month that the ATO has confirmed the long-held view that a rollover/benefit transfer to an SMSF in respect of a member will be treated as a contribution for the purpose of applying the active member test.


This test is one of three tests that are used to determine whether a complying superannuation fund has lost its residency status and transformed from an Australian superannuation fund to a non-resident superannuation fund, Mr Hallinan said.

The loss of residency status will cause a special tax to be imposed on the fund at the rate of 47 per cent on the asset value of the fund, less undeducted contributions.

“In short, once a member of an SMSF becomes a non-resident – no contributions, rollovers or benefit transfers by or in respect of the member should be received by the SMSF,” Mr Hallinan said.

“If not, the SMSF may fail the active member test and therefore cease to be a complying superannuation fund.”

Townsends issues reminder on active member test
smsf logo
smsfadviser logo
join the discussion

Why we’ll keep delivering for our communities in the face of COVID-19


As Australia tries to keep pace with a rapidly changing business and social landscape in the wake of COVID-19, Momentum Media is leading the way delivering essential content to our communities, writes Alex Whitlock, director of SMSF Adviser.

Read more

Latest poll

Do you outsource a part of your business operations?

Website Notifications

Get notifications in real-time for staying up to date with content that matters to you.