There are a few potential tax issues with US direct investment held by a SMSF.
The first potential issue is to do with the IRS (Internal Revenue Services) tax rule on investment in a passive foreign investment company (PFIC). This rule relates to either US citizens living in Australia or an Australian residing in the US and it can be retrospective.
The second potential issue is to do with the US Estate Taxes system. Whereby if your wealth is above USD5.49 million and you or your SMSF hold direct investments, like shares or properties, and you passed away, your estate maybe taxed by the US even if you are not a resident or a citizen.
These issues are not new however now with the strong reporting compliance of anti-money laundering, the data generated has made this issue surface and the tax liability to materialise.
My advice is that if you think these issues are relevant to you, investigate your position as soon as possible.
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Disclaimer and Warning
The information above is of a general nature only. It should not be used as a source to make financial decisions. It’s also important to note that the legislation and figures related to this topic tend to change regularly and therefore the information above may not reflect the current status. We recommend that if you are looking for advice on this matter, you should contact us.