“Under the current legislation defining an ‘Australian superannuation fund’, it must meet three conditions to be complying, and failure to do so means that it is treated as a non-complying fund,” she said.

“In particular, SMSFs and small APRA funds can find themselves in breach of the ‘active member test’ where a non-resident for taxation purposes contributes to the fund. If the fund balance of this contributor/s exceeds 50 per cent of the balances of all the active members of the fund, then it becomes non-complying and loses its tax privileges."

Ms Slattery believes this system is “clearly discriminatory” for SMSF members who have been posted overseas and intend to return home.

“The reality is that SMSFs members have a barrier to saving for retirement that other funds do not face, as well as bearing increased costs to ensure they do not lose the status of being an Australian superannuation fund while the fund’s member/s are overseas,” she said.

“The ‘active member test’ is an unnecessary source of red tape – especially for SMSFs – that add costs to and reduces the efficiency of the superannuation system,” she added.

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