Pensions 1 April 2014, small extension.
Feb 18th 2014, 8:41 pm
#1
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Joined: Jan 2011
Location: New Zealand
Posts: 455
Pensions 1 April 2014, small extension.
A lot has been written about the new tax rules that are in front of Parliment and due to be made law any day now. Here is the main thread.
To quickly recap:
It is the NZ IRD's opinion that a transfer of a Pension Fund to NZ is taxable.
An Amnesty is in place which provides for the first 15% of the transferred amount to be taxed. That means 85% is tax free.
Transitional residents have the first 4 years to transfer their pension without any tax.
New rules for transfers of Pension savings start on 1 April 2014. New rules will be:
First 4 years tax free then 5% per year. EG after 6 years of arriving in NZ, you transfer your pension, first 4 years are free, only taxed on 2 years, therefore the first 10% will be taxable.
Yesterday, the Minister of Revenue announced a small extension for those that can show they have lodged an application before 1 April 2014 to transfer their Pension savings to NZ. The extension applies to the 15% Amnesty only.
This is great news for those considering a transfer or in the process of a transfer. In general terms, if a person has lived in NZ for longer than 7 years and has not transferred their pension, it might be worth considering and looking into your options.
Disclaimers: Not all pensions should be transferred. Each persons circumstances are different and what is right for one person may be wrong for another. There are may advantages and disadvantages of making a transfer, including fees. There are advantages and disadvantages of leaving the funds in the UK, also including fees. Some commentators are recommending transfers into Kiwisaver without understanding the consequences and potential penalties of doing so. Please do you own research before committing!!
To quickly recap:
It is the NZ IRD's opinion that a transfer of a Pension Fund to NZ is taxable.
An Amnesty is in place which provides for the first 15% of the transferred amount to be taxed. That means 85% is tax free.
Transitional residents have the first 4 years to transfer their pension without any tax.
New rules for transfers of Pension savings start on 1 April 2014. New rules will be:
First 4 years tax free then 5% per year. EG after 6 years of arriving in NZ, you transfer your pension, first 4 years are free, only taxed on 2 years, therefore the first 10% will be taxable.
Yesterday, the Minister of Revenue announced a small extension for those that can show they have lodged an application before 1 April 2014 to transfer their Pension savings to NZ. The extension applies to the 15% Amnesty only.
This is great news for those considering a transfer or in the process of a transfer. In general terms, if a person has lived in NZ for longer than 7 years and has not transferred their pension, it might be worth considering and looking into your options.
Disclaimers: Not all pensions should be transferred. Each persons circumstances are different and what is right for one person may be wrong for another. There are may advantages and disadvantages of making a transfer, including fees. There are advantages and disadvantages of leaving the funds in the UK, also including fees. Some commentators are recommending transfers into Kiwisaver without understanding the consequences and potential penalties of doing so. Please do you own research before committing!!
Last edited by chc4me; Feb 18th 2014 at 8:46 pm.
Feb 18th 2014, 8:43 pm
#2
BE Enthusiast
Thread Starter
Joined: Jan 2011
Location: New Zealand
Posts: 455
Re: Pensions 1 April 2014, small extension.
Two releases from the IRD, a Frequently Asked Questions and a Fact Sheet (attached).
