# How a non-resident for tax purposes in Australia affect your super, owning/ a house?



## citizen_of_the_world (Jul 28, 2017)

Hello!

I'm a non-resident for tax purposes in Australia and want to know:

- What happens if I want to buy a house in Australia while overseas? This would be a my first house there.

- How can I contribute to my Super-fund while overseas? How much tax do I have to pay? Sorry, but I don't know how super works.

- How can I setup an SMSF while overseas?

I appreciate any piece of information here <3

Thank you


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## Moulard (Feb 3, 2017)

> - What happens if I want to buy a house in Australia while overseas? This would be a my first house there.


If you are an Australian Citizen or Permanent Resident there should be no issue, and you may even be eligible for the First Home Owner Grant in the state where you are buying or building your home.

First Home Owner Grant

If you are not, then Australia Foreign Investment Review Board limits investment in residential real estate. Unless you were an Australian Citizen overseas you would not be able to purchase an established home. Bunch of information on the FIRB website

Residential real estate – Foreign Investment Review Board



> - How can I contribute to my Super-fund while overseas? How much tax do I have to pay? Sorry, but I don't know how super works.


Basically there are three types of contributions to superannuation.

1) the mandatory employer contributions (currently 9.5%). These contributions are taxed at 15% but taxed as income of the superfund, not to you. Depending on the totalisation agreement between Australia and the country you are currently resident in, you employer could be required to make these payments into your chosen fund, or their default fund if you have not made a choice. This amount will be preserved until you reach retirement age.

2) Salary sacrifice. Basically an agreement between you and your employer to reduce your taxable income and have the employer add it to their mandatory contributions. This amount will be preserved until you reach retirement age.

3) Post tax contributions from your salary. Not taxed, as it has already been taxed as your income. 

4) Government Co-contribution. Low income earners who contribute to their super will have matching funds given by the government


But generally employer and salary sacrifice contributions are treated as non-assessed to the employee. The funds go direct to the fund (or via the ATO via if the employer doesn't pay) and is taxed at a concessional rate of 15%... Growth in the fund it taxed at a concessional rate to the fund itself not the employee.. Once you reach your preservation age then disbursement from the trust is tax free to the retireee

Recent law changes in Australia have changed the tax treatment of contributions beyond certain limits... 

https://www.ato.gov.au/uploadedFiles/Content/SPR/downloads/SPRQC38466 Super contribution limits.pdf



> - How can I setup an SMSF while overseas?


Possibly yes, but in practice it could be very difficult.

There are specific rules around self managed super funds. Three key ones are:

-the fund must be established in Australia or at least one of its assets must be in Australia
-the central management and control of the fund is ordinarily in Australia. 
-the fund either has no active members or it has active members who are Australian residents and those members hold 50% of the value of the fund.

Australia does recognize as foreign superannuation funds and trusts that comply with the intent of Australian Superannuation laws... However the risk is that if it does not it will not get any of the concessional tax treatment and therefore you could be subject to tax on their rollover to an Australian compliant fund or on distribution at retirement. 

If you are considering setting up a retirement trust that complies with both your local laws and Super laws, you will need good professional advice. 

Either that or wait until you are resident in Australia.

Here is the ato page on SMSF

https://www.ato.gov.au/Super/Self-managed-super-funds/


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