Taking Super Overseas for Investment

Hi everyone. I am a total novice to super regulations in Aus so please excuse my questions if they don't make any sense. I am a 28 yo Australian citizen who needs to move overseas for an indefinite period of time (at least 10 years) due to family commitments. I am thinking of investing it in real estate there which is guaranteed to return more than just leaving it in a super fund here.
Currently I have approx $45,000 in my super account and would like some suggestions for my questions below:

1) Can I legally withdraw my super to self manage and take it overseas?
2) If the answer to question 1 is 'No' then is there any other option that lets me to do so?
3) If I do get my super out by setting up a trust for example, can I then use the money for anything or do I need to show some proof of investment on an yearly basis?
4) Will I have to pay tax on the super if I withdraw it?

I also have thought's of opening up a business to keep me occupied overseas so I would like to know if the rules are any different if I am investing my super into a company. I will be grateful for any suggestions on the above questions.
Thanks in advance.

 

Hi mate - sorry for the cut and paste - but here is your answer in regards to your ability to take your super:

So to answer your questions:

No - see above.
You are an Australian citizen so you cannot.

Not really.

A self managed super fund (SMSF) can enable a person to invest overseas - however the central management decision making and control must remain in Australia.

At the moment you have no where near enough in super to validate the cost of setting up and operating a SMSF by yourself - you would need probably $145k rather than $45k

If you did know someone - say a close friend or family member who was definitely guaranteed to be staying in Australia permanently and they already have their own SMSF, it would be possible to become a member of their fund, and then you could subsequently appoint them (or another trusted 3rd party) to be trustee in your stead via a power of attorney.

In this case you would become an inactive member, and due to the power of attorney covering your trusteeship of the SMSF (all members must be trustees) - the SMSF would still be an 'Australian Super Fund' and the trustees would have the power to invest your $45k as they see fit - which may include overseas assets such as property.

Some technical references for more information:
Tax Ruling - Australian Super Fund TR 2008/9

SMSFs and Powers of Attorney

Assuming you did transfer your $45k to a 'friendly' SMSF then it could only be invested in allowable investments - so you still can't touch it or borrow funds to start a business etc

Also, even though an Australian super fund / SMSF can invest into overseas assets, each country has it's own foreign investment / ownership rules - meaning a foreign entity such as a SMSF may not be legally enable to purchase an investment such as foreign real estate directly or indirectly.

In addition, there would likely be foreign tax paid or withheld - which would typically exceed the flat 15% of tax Australian super funds pay - meaning you would lose a lot of the tax effectiveness investing via super offers.

Investing in some assets overseas (such as real estate) will also add to any administration costs of the SMSF due to the extra work required to account for and audit the foreign investment - these costs eat directly into your returns.

You cannot withdrawal it so you will pay no tax.


Sorry if I have gone on a complete tangent with my response - you were asking for a way to invest your super overseas - so I have answered that to the best of my ability.

Would I take my own advice if I was in your situation? NO

I would do the following:

- Get some advice from a qualified and experienced financial planner on which super fund is best for you
- Let the $45k grow over the estimated 10 years you will be overseas
- You reckon that you can

- OK - you can't actually guarantee anything - but you do have youth and a minimum 10 year investment time frame on your side which means you can take a more aggressive / high growth investment approach

I hope you find this information useful.

SM

 

Great response SM
cheers

 

Thanks sm for the fast response, that was exactly what I needed to know.
Problem is I don't know anyone close that does a SMSF.
You are right about my intentions to invest in a more aggressive market overseas which is a hit or miss in most cases but my dad is highly involved in property investments there so I am hoping he will steer me in the right direction. But then again nothing is guaranteed so I guess I will just leave it in the current super fund.
Thanks again.

 

Very informative response.

Does the same apply if you renounce your citizenship?

 

Good question davebiz

I don't think so.

I believe only temporary residents can.

However, I suppose if you were no longer an Australian citizen (i.e. living permanently overseas with foreign citizenship + passport), them came back to Australia, worked a bit, got some super, then applied to have it released as a temporary resident departing Australia super payment - it may be possible.

Access to super benefits for former temporary residents

SM