Australia

A regulated superannuation fund must have a trustee, and that trustee must be a company unless the fund's sole or primary purpose is old-age pensions.¹ Employers must pay the Super Guarantee into each eligible employee's fund: 12% of earnings from 1 July 2025, worked out on qualifying earnings and paid each payday from 1 July 2026.² Members, their spouses, family, and friends can add voluntary contributions, and so can the government through co-contributions.³

Concessional contributions (employer payments, salary sacrifice, and personal contributions claimed as a deduction) are capped at A$32,500 for 2026–27, and non-concessional (after-tax) contributions at A$130,000.^4,5 So the employer pays in, and the member can too.

A foreign trust.

The fund must have a trustee, who must keep it solely for the members' retirement, age, and death benefits and the other purposes the Act lists,^1,6 which is what makes an arrangement a trust for U.S. purposes: trustees holding property to protect or conserve it for the beneficiaries.⁷ A trust is domestic only if a U.S. court can exercise primary supervision over it and U.S. persons control its substantial decisions. A fund governed by Australian law and run by its Australian trustee meets neither test, so it is foreign.^8,9

No IRS guidance addresses super's classification. An investment trust whose trustee can vary its investments is not classified as a trust,¹⁰ but we read super as one. The law requires the fund to be kept solely for retirement, age, and death benefits and limits when benefits are paid,^6,11 and those are features of the funds the IRS has ruled privately are trusts, one of them a fund whose members chose their own investments.^12,13

We read the employer-paid part as a §402(b) employees' trust.

No IRS ruling addresses Australian super, though the IRS has ruled privately that a similar foreign fund, with mandatory employer contributions and personal accounts, is a §402(b) trust.¹⁴ We read the employer-paid part as a §402(b) employees' trust: the Super Guarantee is a contribution by an employer to a trust for its employees,² and a trust created outside the United States cannot be exempt under U.S. §501(a).¹⁵

On that reading, employer contributions are U.S. income to you in the year they are paid, to the extent they are vested,^16,17 and the foreign earned income exclusion cannot cover them.¹⁸ You are not treated as owner of the part they fund.¹⁹ Once your own contributions have come to exceed your employer's, you are treated as owner of the part your contributions fund.²⁰ Your own include salary sacrifice: Australia counts it as an employer contribution,²¹ but the IRS's reading of a similar fund treats amounts paid in at the employee's election as the employee's own, taxed as pay.²² Contributions withheld from your pay because the law requires them count as your employer's.²³ No contribution to a §402(b) trust is a Part I event, your own included.²⁴ Payouts are taxed under §72 when they are paid or made available to you, and an amount you could withdraw just by asking counts as made available,^25,26,27 and they stay off Part III if you report them as compensation income,^28,29 unlike payouts from a part you own.³⁰

The government co-contribution comes from neither you nor your employer, so §402(b)(1), which reaches only an employer's contributions, does not cover it,¹⁶ and no IRS guidance addresses it. Australian law lets it be paid to your fund or to you,³¹ and the ATO says it isn't taxed when it is paid to the fund.³² The stronger reading counts it as your own contribution, as the New Zealand guide reads KiwiSaver's government contribution; on that reading it is likely income to you when it is paid in, unless the welfare exclusion, which needs a payment based on need, covers this income-tested payment, which no IRS guidance confirms.³³ The other reading, that the government is the contributor, would tax it only when it is paid out, as the United States does its own Saver's Match.³⁴ It is not settled. If you include it in your income for the year it is paid in, it is your basis; if you don't, it is taxed when it is paid out, so it is taxed once either way.³⁵

One further rule: if you are a highly compensated employee and one reason the fund is not exempt is that it fails the U.S. coverage tests, you include your vested balance, less what has already been taxed to you, in income each year instead.³⁶ No IRS guidance says whether an Australian fund fails those tests.

Rev. Proc. 2020-17: unlikely. The proposed regulations: possible, with open questions.

Rev. Proc. 2020-17 exempts an eligible individual (one who has filed U.S. returns and reported the fund's income as U.S. law requires)³⁷ from Forms 3520 and 3520-A for a retirement trust that meets its conditions.³⁸ Super meets four of them. It is tax-favored: concessional contributions and a complying fund's income are taxed at 15%.^39,40,41 Its provider must report member information to the ATO, which can include contributions and account values.^42,43 It must be kept solely for retirement, age, and death benefits and the other purposes the Act lists, and benefits cannot be paid except as the regulations permit.^44,6,11 And the Super Guarantee is paid for each eligible employee, which points to meeting the employer-plan condition.^45,2

Two conditions are not met on the face of Australian law. Condition (3) permits only contributions from earned income,⁴⁶ but a fund can accept every type of contribution for a member under 75, including contributions by family and friends.^47,3 Condition (4) needs contributions limited to a percentage of earned income, US$50,000 a year, or US$1,000,000 for life.⁴⁸ Super's caps apply per person across all funds, and going over them brings extra tax rather than a refusal.^49,50 The non-concessional cap alone, A$120,000 for 2025–26, was about US$80,268 at the Treasury rate for December 31, 2025 (A$1.495 per US$1).^5,51 With no IRS guidance on super, Rev. Proc. 2020-17 is unlikely to cover it.

The proposed regulations, which you may rely on now if you apply them in full and consistently with related persons,⁵² loosen both conditions. Contributions need only “generally” come from earned income,⁵³ and a fund qualifies without a contribution limit if your super funds in Australia together stay at or under US$600,000 at every point in the year (adjusted for inflation from 2026).⁵⁴ Two questions remain open. Read literally, every condition must be “established by the laws” of the fund's country,⁵⁵ and Australian law sets no limit on a super balance,⁵⁶ while the preamble ties the value test to the Form 8938 thresholds, which measure an account's actual value.⁵⁷ We read it as the actual value, and the app's exemption check asks it that way. And whether “generally” covers super's broad voluntary contributions is not settled. The annual contribution limit does not help: A$120,000 was about US$78,380 at the Treasury rate for July 1, 2025 (A$1.531 per US$1, the rate dated June 30), above the US$75,000 limit, which is not adjusted for 2025.^58,51

No deferral, and no effect on reporting.

The U.S.–Australia treaty does not defer U.S. tax on a fund's earnings or exclude contributions. Its pension article covers pensions, annuities, social security, and support payments once paid.⁵⁹ For a U.S. citizen or resident, the saving clause lets the United States tax as if the treaty did not exist, and of the pension article it keeps only the rules for social security and other public pensions and for alimony and child support.^60,61 There is no treaty position to claim. Even where a treaty does defer tax, the IRS has said Forms 3520 and 3520-A still apply.⁶²

Little to file on the §402(b) reading: Part II and Form 3520-A only for a part your own contributions fund.

Read as a §402(b) trust: no Part I for any contribution.²⁴ No Part II or Form 3520-A for the employer-funded part; once your own contributions exceed your employer's, Part II and Form 3520-A each year for the part they fund.^19,20,63 No Part III for payouts from the employer-funded part that you report as compensation income;²⁸ payouts from a part you own go on Part III, lines 24 and 27.³⁰ No Form 4970: payouts from a §402(b) trust are taxed under §72, not under the trust distribution rules, and the income of a part you own is taxed to you each year.^25,64,65

If the fund is not treated as a §402(b) trust, each contribution you make is a Part I transfer and you are treated as owner of the part it funds, so Part I, Part II, Form 3520-A, and Part III all apply.^66,67,63,68 Either way, an eligible individual whose fund qualifies under Rev. Proc. 2020-17 or the proposed regulations files none of them.^38,52 FBAR (FinCEN Form 114) and Form 8938 are separate, and an exemption from Forms 3520 and 3520-A does not remove them.^69,70

An SMSF is a super fund with no more than six members, in which every member is a trustee, or a director of the company that is trustee.⁷¹ Members can fund it with personal contributions,⁴⁷ and an employer can pay into it too: the Act contemplates an SMSF with an employer-sponsor.⁷² The same caps apply as for other super funds.^4,5

A foreign trust.

For the same reasons as other super funds: it must have trustees who hold its assets for the members, and it is governed by Australian law.^1,7,8 An SMSF that stops being a complying fund is taxed at 45% instead of 15%, but it is still a trust.⁴¹

Only an employer-paid part can be a §402(b) employees' trust.

And no IRS guidance addresses SMSFs. Where an employer pays in, read that part as in the superannuation fund block above.¹⁶ Once a member's own voluntary contributions exceed the employer's, the member is treated as owner of the part those contributions fund.^20,23 An SMSF that receives no employer contributions is not an employees' trust, and §402(b) does not apply to it.

Rev. Proc. 2020-17: unlikely. The proposed regulations: possible under the value test.

The same analysis as other super funds, with the same result: Rev. Proc. 2020-17 is unlikely to cover an SMSF, because a fund can take contributions from family and friends for a member under 75,^46,47 and the proposed regulations may cover one whose value stays at or under the threshold, with the same open questions.^54,52 The employer-plan condition applies only to employer-maintained trusts, so it does not count against an SMSF.⁴⁵

No deferral, and no effect on reporting.

Same as other super funds: no deferral, and no effect on reporting.^59,60,62

Full reporting for an SMSF only its members pay into.

For an SMSF funded only by its members: you are treated as owner of the part your contributions fund, including contributions made before you became a U.S. person, because its income is held for you,^73,67 so Part II and Form 3520-A are due each year⁶³ and payouts go on Part III.⁶⁸ Each contribution you make as a U.S. person is a Part I transfer,⁶⁶ and one made within 5 years before your U.S. residency started is treated as made on your residency starting date and goes on Part I for that year.⁷⁴ The trustees are the members, so if the fund does not file Form 3520-A, you prepare a substitute from the fund's own accounts.⁷⁵ Form 4970 does not apply to the part you own, because its income is taxed to you each year.⁶⁵ Where an employer also pays in, treat the employer-paid part as in the superannuation fund block above. An eligible individual whose SMSF qualifies under the proposed regulations files none of these.⁵² FBAR (FinCEN Form 114) and Form 8938 are separate, and an exemption from Forms 3520 and 3520-A does not remove them.^69,70

A trust set up under Australian law, during someone's life or by their will, in which a trustee holds investments or a business for family members.⁷ If the trustee mainly runs a business for profit rather than holding property for the family, U.S. law may classify the arrangement as a business entity rather than a trust.⁷⁶

Usually a foreign trust.

Usually an ordinary trust, because the trustee holds property for the beneficiaries,⁷ and a foreign trust, because it is governed by Australian law and administered in Australia.^8,9

A U.S. person who funds it is owner when it has a U.S. beneficiary; a foreign settlor only in two narrow cases.

Who is treated as owner decides who files Part II and Form 3520-A. A U.S. person who transfers property to the trust is treated as owner of the part it funds for any year in which the trust has a U.S. beneficiary.⁶⁷ Someone who funds the trust while not a U.S. resident and becomes one within 5 years is treated, for this rule and for Part I, as transferring that part of the trust on the day their U.S. residency starts.⁷⁴ A settlor who is not a U.S. person is treated as owner only if they can revoke the trust alone, or if only they or their spouse can receive distributions during their life.⁷⁷ Otherwise no one is owner, and the trust is taxed as a separate, non-grantor trust.⁷⁸

No relief.

For a U.S. citizen or resident, the saving clause lets the United States tax as if the treaty did not exist, apart from a short list of articles, none of which concerns foreign trust reporting.^60,61

Part I for whoever funds it, Part II and Form 3520-A for an owner, Part III for whoever receives a distribution.

A U.S. person who transfers property to the trust files Part I for that year.⁶⁶ A U.S. owner files Part II and makes sure Form 3520-A is filed, or files a substitute, each year.^63,75 A U.S. beneficiary who receives a distribution files Part III for that year.⁶⁸ A distribution from a non-grantor trust that carries out income the trust kept in earlier years is an accumulation distribution, taxed with an interest charge on Form 4970.⁷⁹ Rev. Proc. 2020-17 does not apply: it covers only retirement trusts and medical, disability, or educational savings trusts.⁸⁰ FBAR (FinCEN Form 114) and Form 8938 are separate and may also apply.⁸¹