Dimond

I have a pension from a British company earnt while working in Britain and my wife has a similar pension from the UK National Health Service.

In Australia we find we have to pay full Oz tax on this, no offsets, no age concessions, no nothing except for an 8% UPP reduction on the UK State pension. Even in spite of the high Australian dollar Australian tax is 20% to 30% higher than the UK equivalent depending on income. This is an exact amount not an estimate. Has anyone else had this kind of experience?

It's a big enough amount of money to make you want to go back to the UK.

Dreamy

Did you not check before you moved as to the tax implications of being PR in another country?

Dimond

Obviously we did not check well enough as I thought there was an offsets as per Australian pensions where the contributions are not taxed at source like some civil service ones in Australia.

Also there is the possibility of transferring the whole pension into Australia with QROPS but we had started to draw it in the UK so it was not possible and transferring a whole pension pot at a certain exchange rate is a big gamble. If you do take this gamble, however, you can receive the whole pension (or "super" as it becomes) tax free.

Bermudashorts

It really is quite normal that when you move to another country you have to pay taxes in that other country at whatever the prevailing rate is. Not sure how this could come as a surprise.

The Australian system has a tax free allowance and tax bands too, just like the UK system and the amount you pay will depend upon which band you fall into. Certainly Australian tax is not typically 20 -30% higher. The two systems are quite comparable for most income levels.

Bermudashorts

What do you mean by offsets? Offset what with what? Contributions are what is paid into a pension whilst you are still working, are you paying into a pension or drawing one?

Dimond

In some of the public sector in Australia where contributions to a super scheme are not taxed (as is normal in the UK), when the pension is drawn, typically when you are over 65 years of age, tax is paid to the ATO. However there is a 10% tax "off-set" which means instead of paying, say $10 000 tax you pay $9 000 tax after the 10% is deducted. See http://www.pss.gov.au/documents/factsheets/psf27.pdf

With a UK pension in Australia we do not get this Australian offset similar pensions get here, nor do we get the extra age allowances available in the UK.

abi31

thought they were removing the additional tax free limit for pensioners in the UK? Isn't that what Osbourne's 'granny tax' is about? So don't think you'll be much worse off.

Pension contributions in the UK are also not taxable - they're either paid gross or paid net and the tax is reclaimed from HMRC (not sure if that's what you were saying though)

lesleys

What sort of visa do you have?

Dimond

No visa- dual nationality, with long residency in the UK and one and a half years in Australia. Still getting tax affairs in order and surprised Oz tax was so much higher than UK on same income.

Bermudashorts

Aargh. It isn't. I have now offered three times to see if I can make sense of it if only you would explain what you mean. Seems some people prefer to just moan.

paddyo

Oh maybe they just don't know enough about taxation to explain it properly, not all people are tax experts so try and help them understand. You seem quite knowledgeable on the subject and you may find your skills could help others even if they 'appear' to not take in what you are saying. It is a quagmire out there and I put my hand up freely and state I am an ignoramus tax wise!

Bermudashorts

The only thing I have asked them to explain is why they believe they are paying 20-30% more tax in Australia than they would in the UK.

They must have some reason to think this is the case, and if I knew why, then yes I was planning to see if I could help explain the issue.

There is nothing I can do to help when the only thing they keep saying is "I pay 20-30% more tax in Australia". If I wasn't interested in helping, then I wouldn't have bothered enquiring further.