gregster10217

Hi all

I've just found out that I've got a job in WA, not sure on start date yet, could be January, but am hoping for it to be April ish.

Anyway, my wife has been ill health retired from her job, and will be receiving a lump sum pension as well as a monthly pension payment. In the UK she gets this lump sum tax free, but as we're relocating to Aus, we want to move it across. I know we'll need to used a forex company to transfer the money across, but just wanted to know if we're going to get hit with tax in Australia? Hoping that if we provide the correct paperwork, we may not have to as it will significantly eat into what is essentially her 'pension', however it will be used to set us up over there. Or is there another way to do it?

Thanks in advance for your replies.

Kiwipaul

My understanding is that the lumpsum and income will have to be declared to the Oz taxman and it will be added to your income for that year (just like earned income).
It will also be taxed in the UK at 20% and so you have to inform the UK Taxoffice that it is being taxed in Ox and so you can get a refund of UK tax paid.

You can avoid the tax on the lump sum in Oz by transferring it into your wifes super as a concessional contribution (max allowed per year $30,000 (if over 55) and then it is taxed at 15%.

This is accurate to the best of my knowledge.

KJCherokee

Do you want to take the money and run, or transfer it into an Australian superannuation scheme? If you (or rather your wife) have a superannuation fund over here you can get your UK fund to transfer directly into Aussie super and there is no tax problem. Not sure whether the local super fund has to pay 15% to the ATO or whether the fact that it is a fund-to-fund transfer means the tax doesn't apply, on the basis that UK tax has already been paid.

I moved my UK company pension rights over to Oz as a lump sum several years ago, so I may not have all the details completely correct, but in general that's the way it works.

JAJ

Perhaps I'm missing something here, but why can't the lump sum be paid before you (or your spouse) become Australian tax resident?

Second, you've not told us what your visa will be, temporary or permanent - it might make a difference.

gregster10217

I am an Aussie citizen, no visa required, and wife will be joining me on a spouse visa. It's being paid out now, she's 39 and I'm 41. Won't be going into another pension fund here or in Aus, we can do with it what we choose. It will be cash in our bank.

Dan_W9

Hi gregster10217,

I believe Kiwipaul may be correct, but your best bet is to ask an Accountant just to make sure. I think there are different implications for anything under £10K, as you don't have to declare it, so it depends on how much you are looking to bring over as you could make a few transfers of £10K. Again though an accountant will know the answer.

Feel free to contact me regarding FX rates..

All the best

gregster10217

Thanks Dan. Will be in touch soon once we know how much and when.

KJCherokee

Not putting it back into superannuation may seem a good idea now, but if you'll listen to someone 25 years older, for heaven's sake make sure that you know how you are going to support yourselves when you are no longer earning an income. Put it off too long and you will suddenly discover you are 55 or 60 and your super will not support you for another 20-30 years. Super may seem like dead money now: it's only when retirement looms that you'll wish you'd saved more at this age.

gregster10217

Thanks KJ. My wife has been ill health retired from work, and can effectively no longer work, although we hope that will change in the future. I have a pension over here which I'll be transferring over to a super fund, as well as contributing to it from day one of the new job. We won't be wasting this cash though, we know how important it is, so the majority will be invested into property once there after getting ourselves settled.

Kiwipaul

Got to agree with JAJ get the lump sum paid before becoming tax resident and then you have no tax liability in Oz.
Their are no special provisions for sums less than $10,000 that I know of it's just that this is the limit at which the Oz gov is informed of the transfer (for money laundering). Transferring $9,999 ten times might avoid automatic notification but it also will make it look suspicious if they have ongoing monitoring to catch this sort of transaction.

gregster10217

Thanks Paul. How would we go about transferring it before my wife becomes a resident? It is just a case of opening an account in her name and moving it across, or is there more to it than that? Also, I'm not resident for tax purposes, yet, could I do the same, I.e. If we split it?

old.sparkles

Sorry gregster - a bit off thread but, if you're wife has been medically pensioned off, have you had any advice regarding the medicals for spouse visa? Might be worth checking out

gregster10217

We have thanks sparkles, and all should be fine!

old.sparkles

That's good - was a little concerned when I read the post

As other's have said, hopefully she will get the lump sum before becoming resident. You could also try contacting Alan Collett - http://britishexpats.com/forum/member.php?u=2105 - who has a UK office and is able to provide advice on tax in both countries I believe

gregster10217

Thanks sparkles. Obviously got to submit visa application, but the nature of the ill health retirement was not of concern to immi when my wife phoned and spoke to them.
I'll look up the link you post and take advice, thanks.