The Commonwealth Superannuation Test for Tax Residency: Is It Still Relevant?

In discussions around Australian tax residency, most people have heard of the resides, 183-day test and the domicile test, but few realise there’s a another — rarely triggered but still legislated — tax residency rule: the Commonwealth superannuation test. It’s one of those quirks of the Australian tax landscape that lingers on the books, but applies to an ever-dwindling group of individuals. Let’s take a closer look at what this test is, why it was introduced, and whether it still has relevance in 2025.

What Is the Commonwealth Superannuation Test?

Section 6(1) of the Income Tax Assessment Act 1936 uses four tests to determine whether an individual is an Australian tax resident, including the Commonwealth superannuation test.

It applies if:

The individual is a member of a superannuation scheme established under the Superannuation Act 1990 or the Public Sector Superannuation Scheme (PSS), and
The individual is either a contributing member or is eligible to contribute to one of those schemes.

If both conditions are met, the person is deemed a resident of Australia for tax purposes, even if they live and work overseas.

Why Does This Test Exist?

The government introduced the test to prevent senior public servants and defence or diplomatic staff from taking up overseas postings and ceasing to be Australian tax residents — despite remaining clearly tied to the Australian government through their superannuation scheme.

The test ensures residency continuity for certain public sector employees who might otherwise satisfy one of the non-residency tests.

So Who Does This Actually Apply To?

Very few people in 2025.

Both the PSS and CSS (the predecessor Commonwealth Superannuation Scheme, under the Superannuation Act 1976) were closed to new members decades ago:

The CSS closed to new entrants in 1990.
The PSS closed in 2005, replaced by PSSAP, which is not caught by this rule.

As a result, the Commonwealth superannuation test only applies to a shrinking population of legacy scheme members — typically those who have long careers in the public service and have not moved across to newer arrangements.

Historically, these funds did not accept voluntary contributions however, recently, these funds may accept personal contributions. This may inadvertently trigger tax residency under the legacy employee test, so we recommend seeking professional guidance before deciding to contribute to your legacy Commonwealth super fund.

Common Misunderstandings

Individuals may believe that their government-linked super scheme means they’re automatically a tax resident.

But in most cases:

They’re not actually contributing to a Commonwealth scheme (e.g., they’re in PSSAP or another fund);
Or they’re former members of PSS or CSS, no longer actively contributing — which the test does not cover;
Or they’re in state-level or university super funds, which are not relevant to this test.

If you’re no longer a contributing member, or you’re in a different scheme entirely, the test does not apply.

When is the Commonwealth Superannuation Test Still Relevant

There are a few limited cases where the Commonwealth superannuation test may still be relevant:

Long-serving DFAT or Defence staff on overseas posting, still contributing to PSS/CSS;
Retirees who delay ceasing membership while living overseas;
Certain senior APS officials who maintain a legacy arrangement.

For these individuals, the test can override other indicators that would otherwise suggest non-residency.

Practical Impact for Expats and Advisers

For 99% of expats, the Commonwealth superannuation test is a non-issue. But for that 1%, it’s important not to overlook:

It overrides other residency tests — if you satisfy it, you’re a resident;
It can impact foreign income reporting, CGT obligations, and super fund compliance (e.g. SMSF residency);
It can trip up otherwise well-structured tax residency positions, particularly for those relying on DTAs or non-resident exemptions.

Final Thoughts: The Commonwealth Superannuation Test for Tax Residency

The Commonwealth superannuation test is a legislative remnant — still in force, but fading in practical relevance. For the vast majority of individuals, especially those in modern super arrangements like PSSAP or UniSuper, it simply won’t apply.

But for a select group of senior public servants, long-time Defence personnel, and legacy PSS/CSS members, it can still carry real consequences for Australian tax residency.

If you’re unsure whether your superannuation membership affects your residency status — or if someone has told you that your super makes you a resident — it pays to double-check the details.

Interestingly, in the 2019 Board of Taxation (BoT) review into Australia’s individual tax residency rules, one of the proposals was to update the Commonwealth superannuation test to reflect contemporary superannuation arrangements. Instead of tying residency to outdated schemes like PSS and CSS, the BoT suggested linking it to currently active funds that are restricted to government employees. Although the government has not implemented this recommendation — and it appears unlikely that it will adopt the BoT’s proposed residency rule changes — the suggestion acknowledges that the current superannuation test no longer suits modern workforce and superannuation structures.

Contact Us

If managing your financial affairs across borders is starting to feel overwhelming, you’re definitely not alone. It’s a complex space, and having the right support can make all the difference. At Atlas Wealth Group, we specialise in supporting Australian expats with cross-border tax planning, superannuation, mortgages and wealth management. Contact us to arrange a consultation with a qualified adviser who specialises in Australian expat financial planning to get personalised guidance tailored to your circumstances.

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Disclaimer: This article is intended for informational purposes only and does not constitute legal or financial advice. Individuals should consult licensed professionals when seeking guidance regarding their financial circumstances.