Forman Financial Services

US Direct Investment Potential Tax Issues

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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