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IRS Superannuation treatment update

by: Claudine Gindel   2017-09-21

A couple of weeks ago, we spoke about US tax treatment of Australian Superannuation funds. We received feedback after doing that video, some from our friends Karen Alpert and John Richardson. The main issue of the debate seems to be:


"If Australian Superannuation Funds were considered by the IRS to be Social Security, Superannuations Funds owned by US persons would exempt much of the US reporting and tax requirements."


The IRS's "unofficial official" position is that Superannuations Funds are NOT Social Security. While this issue has not been litigated in tax court, we explain the very difficult uphill road someone would have trying to convince a US court why the IRS is wrong. Additionally, we discuss the risk of getting it wrong -- the possibility of the two $10,000 penalties the IRS could assess -- per year.


In this video, we reply to the feedback we received, including these questions:

  • If the Australian Tax Office declared that Superannuation Funds held by US persons are "Social Security," would that exempt all Superannuation funds from US taxation?
  • Are Superannuation Funds like a social security tax? After all, there is a government mandate of 9.5% that employers must pay over to the government (or can elect to bypass and send it to the employee's fund). Isn't that dispositive on this issue?




As always, we'll take any feedback you have and see if we can address your questions. Seeing as how the IRS doesn't have any official documentation on Superannuation funds, it can be a confusing subject to muddle through. 


If you are thinking of making a disclosure about an unreported Superannuation Fund, or already have made a submission and are worried it might be incorrect, feel free to contact us for a first or second opinion. Call us at 888-727-8796 or email Any information you share with us will be kept confidential. 


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