“A lot of people think with this rule that you don't have to worry about it until the two years are up, so if someone went on secondment for five years, you wouldn't have to worry about it until the second year. But by the end of the second year that's not the case, because that person intended to be away for five years, and you’d be having to think about it before they leave to make sure that something is in place.”

Scott said a budget proposal was released in 2021 wanting to extend the temporary absence to five years but as yet nothing has been confirmed.

“So, for example, if an SMSF member wanted to go to Stockholm for five years at the moment, they wouldn't be able to rely on this,” she said.

“Presently, if they stayed there for more than two years it would be considered a permanent basis and you’d need to think about either putting in an enduring power of attorney, or possibly rolling that person into a retail or APRA.”

Scott illustrated the temporary absence rule with an example of Anna, who is a sole member of an SMSF and director of the corporate trustee. She is an accountant and has been offered a two-year position with her firm's London office which she accepts. She maintains her residence in Australia, and intends to return once the position ceases.

“In this case, we need to think about: what was Anna's intention? Was she going to be over for longer than two years? No, she says that it's temporary, so she can rely on the temporary absence safe harbour in this scenario, and won't need to worry about appointing an enduring power of attorney,” she said.

If a member intends to stay overseas for longer than two years, Scott says the SMSF member(s) should then consider the option of division of central management control.

She gives an example of Nick and his wife, Nat, who are members of an SMSF and directors of the corporate trustee. Nick is offered a position at his employer's Paris office. The role is a minimum of five years, which he accepts.

The couple have children who are in high school, so Nat has decided to remain in Australia.

“Although Nick is going to be away for two years, as long as both he and Nat are making the high level decisions of the fund, we can rely on this concept of division of central management control,” she said.

“The fund doesn't need to do anything to continue to meet those requirements, as long as Nat remains in Australia making those decisions.”