I thought I would share with you my experience so far on this topic. We are planning to re locate to sydney in July this year. I have been trying to get as much done in advance on the financial front and thought i had it all sussed. I spoke to the three companies with whom I have final salary schemes and told them I was seeking to re locate and they advised all I need do is advise change of address when established and everything would be Ok. On the face of it this is so, when i come to retire in 9-14 years I will be sent the cheques pay the Aussie tax circa 40% the same as the Uk and all is well. However after seeking professional advice I am advised that if I transfer the pot of accumulated money in advance ( within 6 months) then when it comes to retirement I can get the funds tax free as only the increase in the fund from when i put it in Aus is taxed and that is only at 15% of the increase. This advice on its own has saved my ££$$$, however you do need to act asap as to make this happen can take many many weeks due to paperwork and the pensions auth in the UK seeking assurance that the fund is in a safe managed system to protect its citizens ...very impressive this!!! also this will vary from person to person so I would advise getting professional help...my dad when he went did not get this advice and is now paying 40%+ tax on his pension income and in hindsight he wish he had obviously.
Now on endowments, this is another issue altogether, if I leave them in the UK and continue to pay into them until maturity to ensure my aussie mortgage can be paid off in 8 years, I will have to pay 47% tax on the increase in the fund every year even though I do not have access to the funds and then when they arrive I pay the same tax on the orig. pot that has accumulated..how about that for punitive tax!! so look at the redemption value selling them to brokers not back to the company which offer really poor rates and seek a secured investment engine in Aus...maybe some of those whowere at the show in Sandown from Australia.
Anyway whats the purpose of this mail..... to say that in my experience it is well worth getting and paying for professional advice in this area as it could just be the best money I have spent in the last ten years.
Am I in the industry NO! FYI I also got a great deal of advice from my home bank as they all have off shore divisions who can help...sorry its so long but I thought I would share the experience so far.
Gary /Terri

I enjoying paying my taxes like the next man - but how would the Aus tax authorites ever know about your UK endowment policies? Can't you just keep them till maturity, exchange into A$ and wire the money over?

I too have taken professional advice and have, and will in the future, saved thousands in tax. Peps and Isas also fall under the same rule in oz as endowments, whatever they have gained in the previous financial year you pay tax on it there and then even if you havent cashed them in. Imagine you've emigrated and left all your investments in the uk thinking everything is fine as you believe they are all tax free, then bang, you get hit for a wopping tax bill at the end of the year, wheres the money going to come from. Sure advice costs money, but in the long run it saves money, sometimes sooner than you think. But make sure its professional as all circumstances are different.

Andy, joiner nothing to do with IFA by the way

You have to be normally resident in th UK to have an ISA, so you should really change your it before emigrating.

you do have to be a resident in the uk to take out an isa but you dont have to cash them in just cos you emigrate, they will stay tax free from the inland revenue but oz will tax it, but its your choice

Gary,

does this mean I have to transfer my pensions within 6 months of going or at least 6 months before, as we are going in August

I see - but you can't make further contributions into your ISA after youve left I take it

only a joiner mate, youll have to seek professional advice on that one

6 months after becoming an Aus tax resident I think

Cath
within 6 months of your arrival, but this time will run away as there are so many things to do and with the time diff and them always wanting it in writing can take a great deal of time start now and don't be disappointed. see you soon
Gary / Terri

Hiya Gary / Terri,

Thanks for the info, It's something that people need to think about, unless thay like paying lots of tax

With regards to the Oz Tax man not knowing where your money is, the British Tax man tellls them!!!!
Remember tax evasion is how Capone went down

I know when my dad left his employers scheme in the Uk it took ages for it to go through, don't underestimate burocracy!!

Taking your pension will also mean that your "pot of money" isn't going to disappear like the Maxwell pensioners, or if the scheme runs out of money like the "steel cable workers scheme" in the UK did, where existing pensioners have priority and all your money goes pop!

My only concern is the valus of the transfer from my final salary scheme. 14 years worth only gives me @21K but I do have another 32 years to go!

Bye
Mark

Hi, just saw this website and I have found it very interesting. I am actually a financial adviser in Australia who has had dealing with UK pension scheme transfers.

New rules have been put in place in australia to help expats to transfer pensions (know in australia as superannuation) into Australian qualifying funds. Basic rules are as follows:

1. Due to australia/UK due taxation agreement, pensions can be paid to australian residents if they have old private pension funds in the uk. You will be taxed in australia in retirement at standard tax rates, as high as 48.5% on income (above $62,500 p.a.).

alternatively you can transfer the benefits. The basic rules apply:

Technical Analysis

The Australian Taxation Office [ATO] has issued a tax ruling (TR 2003/12) which deals with a wide range of tax issues that could affect advice in this area. Click on the link below to view the full ruling.

Tax Ruling TR 2003/12

The following is a summary of the issues that advisers need to be aware of:

The six month window

It is generally understood within the financial planning industry that there is a 6 month window in which a migrant can be paid a lump sum out of a foreign superannuation fund without incurring an Australian income tax liability. However, there are a number of specific conditions that have to be met before the 6 month exemption applies. They are as follows:

the payment must be made from a foreign superannuation fund within 6 months after the taxpayer became a resident of Australia;


the payment can’t be a pension;


the period to which the payment relates must not include any period other than a period in which the taxpayer was a non-resident or a period between the time the taxpayer became a resident and the time the taxpayer received the payment; and


the amount paid must not exceed the amount that was 'properly payable' out of the fund to the taxpayer at the time the payment was made. The meaning of amount 'properly payable' from a foreign superannuation fund is the amount of the taxpayer's vested benefit on the day it is actually paid out or transferred . The ruling sets out an example of how the calculations are performed and in some cases it may be advisable to seek written advice on the issue from the ATO.
Payments outside the six month window

Where the transfer from the foreign superannuation fund occurs outside the 6 month window it is possible for the transfer to be taxed under s.27CAA of the Income Tax Assessment Act 1936 even though the client may not have physically received the funds. The amount included in assessable income under s.27CAA is taxed at the client’s marginal rate of tax. The payment is not an ETP.

In order to work out the investment earnings that accrue in a foreign fund during the period that a taxpayer is a resident of Australia, s.27CAA compares the amount properly payable (i.e. the member’s vested benefit in the fund on the day of receipt), which in most cases is the amount actually received from the foreign fund, with the amount that would have been received if the payment had been made on the day before the taxpayer became a resident of Australia. (i.e. the amount ‘properly payable’ being the member’s vested benefit in the fund on the day before the ‘relevant day’, defined to be the day on which the client became a member of the fund or the first day during the period to which the relevant payment relates on which the client became a resident of Australia, whichever is the later.) Contributions made by the client/client’s employer are not counted in this calculation.

Offshore transfers to a personal policy

It may be a requirement of the ‘home" country’s superannuation rules that a superannuation interest with an employer, say, be transferred to a personal policy when the person migrates. Such "transfer policies" give rise to FIF issues assuming the $50,000 small investor threshold is exceeded (see below for more detail). The ATO notes in its ruling that a pension transfer policy is not an employer-sponsored fund falling within the FIF exemption even though the funds came from an employer-sponsored fund.

Can the client pay the tax arising under s.27CAA using the foreign superannuation?

There are two basic situations.

If the funds are transferred to an offshore transfer fund then the cash will presumably not be available to the client. If there is a transfer from the offshore fund to an Australian fund the normal preservation rules would apply. Unless the client had sufficient unrestricted non-preserved money in the fund, the personal tax liability would have to come out of other funds.

If the funds are paid directly to the client then the client will have the cash to pay the tax liability.

The treatment of transferred foreign superannuation amounts within the Australian fund

Because the transfer is not an ETP – and hence not a rollover –the contribution must satisfy the normal rules in relation to the acceptance of contributions. The benefits transferred from a foreign fund to an Australian superannuation fund are treated as undeducted contributions provided that the transfer does not exceed the amount that the client would have been entitled to receive if they had been eligible to take the benefit. If the amount exceeds the amount which is properly payable at the date of the transfer, the excess will be treated as a taxable contribution to the complying fund (s.274(10) ITAA 1936).

CGT implications of a transfer of foreign superannuation amounts

The transfer or payment of a foreign superannuation amount does not have CGT consequences.

RBL implications of a transfer of foreign superannuation amounts

Since the payment is not an ETP it does not have any RBL consequences.

Eligible service period implications of a transfer of foreign superannuation amounts

As the payment is not considered to be a rollover (because the payment is not an ETP), the period of fund membership with the foreign fund will not form part of the eligible service period.


The big issues I have found with this are:

1. do you want to give up your pension entitlements in the UK
2. If yes, it takes sometimes months to get responses from the UK funds (compared to australian funds which can react within 1 week).
3. What fund do you want to receive the funds in australia ( I can help you with this).


It is advised to get the requirements of the UK fund before you leave as they will vary from fund to fund

I am more than happy to assist as I have dealt with these issues and transfers before. Also some firms charge huge fees for this transfer.

If you would like some assistance, please email me on [email protected]

Regards
George Caredes
+261 9239 0011

Hi, just saw this website and I have found it very interesting. I am actually a financial adviser in Australia who has had dealing with UK pension scheme transfers.

New rules have been put in place in australia to help expats to transfer pensions (know in australia as superannuation) into Australian qualifying funds. Basic rules are as follows:

1. Due to australia/UK due taxation agreement, pensions can be paid to australian residents if they have old private pension funds in the uk. You will be taxed in australia in retirement at standard tax rates, as high as 48.5% on income (above $62,500 p.a.).

alternatively you can transfer the benefits. The basic rules apply:

Technical Analysis

The Australian Taxation Office [ATO] has issued a tax ruling (TR 2003/12) which deals with a wide range of tax issues that could affect advice in this area. Click on the link below to view the full ruling.

Tax Ruling TR 2003/12

The following is a summary of the issues that advisers need to be aware of:

The six month window

It is generally understood within the financial planning industry that there is a 6 month window in which a migrant can be paid a lump sum out of a foreign superannuation fund without incurring an Australian income tax liability. However, there are a number of specific conditions that have to be met before the 6 month exemption applies. They are as follows:

the payment must be made from a foreign superannuation fund within 6 months after the taxpayer became a resident of Australia;


the payment can’t be a pension;


the period to which the payment relates must not include any period other than a period in which the taxpayer was a non-resident or a period between the time the taxpayer became a resident and the time the taxpayer received the payment; and


the amount paid must not exceed the amount that was 'properly payable' out of the fund to the taxpayer at the time the payment was made. The meaning of amount 'properly payable' from a foreign superannuation fund is the amount of the taxpayer's vested benefit on the day it is actually paid out or transferred . The ruling sets out an example of how the calculations are performed and in some cases it may be advisable to seek written advice on the issue from the ATO.
Payments outside the six month window

Where the transfer from the foreign superannuation fund occurs outside the 6 month window it is possible for the transfer to be taxed under s.27CAA of the Income Tax Assessment Act 1936 even though the client may not have physically received the funds. The amount included in assessable income under s.27CAA is taxed at the client’s marginal rate of tax. The payment is not an ETP.

In order to work out the investment earnings that accrue in a foreign fund during the period that a taxpayer is a resident of Australia, s.27CAA compares the amount properly payable (i.e. the member’s vested benefit in the fund on the day of receipt), which in most cases is the amount actually received from the foreign fund, with the amount that would have been received if the payment had been made on the day before the taxpayer became a resident of Australia. (i.e. the amount ‘properly payable’ being the member’s vested benefit in the fund on the day before the ‘relevant day’, defined to be the day on which the client became a member of the fund or the first day during the period to which the relevant payment relates on which the client became a resident of Australia, whichever is the later.) Contributions made by the client/client’s employer are not counted in this calculation.

Offshore transfers to a personal policy

It may be a requirement of the ‘home" country’s superannuation rules that a superannuation interest with an employer, say, be transferred to a personal policy when the person migrates. Such "transfer policies" give rise to FIF issues assuming the $50,000 small investor threshold is exceeded (see below for more detail). The ATO notes in its ruling that a pension transfer policy is not an employer-sponsored fund falling within the FIF exemption even though the funds came from an employer-sponsored fund.

Can the client pay the tax arising under s.27CAA using the foreign superannuation?

There are two basic situations.

If the funds are transferred to an offshore transfer fund then the cash will presumably not be available to the client. If there is a transfer from the offshore fund to an Australian fund the normal preservation rules would apply. Unless the client had sufficient unrestricted non-preserved money in the fund, the personal tax liability would have to come out of other funds.

If the funds are paid directly to the client then the client will have the cash to pay the tax liability.

The treatment of transferred foreign superannuation amounts within the Australian fund

Because the transfer is not an ETP – and hence not a rollover –the contribution must satisfy the normal rules in relation to the acceptance of contributions. The benefits transferred from a foreign fund to an Australian superannuation fund are treated as undeducted contributions provided that the transfer does not exceed the amount that the client would have been entitled to receive if they had been eligible to take the benefit. If the amount exceeds the amount which is properly payable at the date of the transfer, the excess will be treated as a taxable contribution to the complying fund (s.274(10) ITAA 1936).

CGT implications of a transfer of foreign superannuation amounts

The transfer or payment of a foreign superannuation amount does not have CGT consequences.

RBL implications of a transfer of foreign superannuation amounts

Since the payment is not an ETP it does not have any RBL consequences.

Eligible service period implications of a transfer of foreign superannuation amounts

As the payment is not considered to be a rollover (because the payment is not an ETP), the period of fund membership with the foreign fund will not form part of the eligible service period.


The big issues I have found with this are:

1. do you want to give up your pension entitlements in the UK
2. If yes, it takes sometimes months to get responses from the UK funds (compared to australian funds which can react within 1 week).
3. What fund do you want to receive the funds in australia ( I can help you with this).


It is advised to get the requirements of the UK fund before you leave as they will vary from fund to fund

I am more than happy to assist as I have dealt with these issues and transfers before. Also some firms charge huge fees for this transfer.

If you would like some assistance, please email me on [email protected]

Regards
George Caredes
+261 9239 0011

Sorry Guys, here is something hot off the press that i found. new amendments, which alleviates the 6 month rule. It is not law yet but proposed. See attached article.

Regards
George Caredes
[email protected]
+612 9239 0011

This I am not sure about as ISA's or peps are tax free you don't have to declare them on your UK tax return so how can the UK taxman tell the Oz taxman about something he dosn't even know about.

Also when you leave the UK do you have to tell the tax office where you are going I didn't and I've had no communication with the tax office since I left (12 years ago).

Also the Oz taxman tracks you via your TFN (for your Oz income) but to track you in the UK they would need your NI no?? which they wouldn't have.

Just imagine the Oz taxman phoneing the UK taxman and asking for tax information on John Smith (UK add unknown NI no unknown). That is even assuming that UK officials would give this sort of information to a stranger without court order and such.

I'm not suggesting you do this and take no responsibility if I'm wrong but I don't think it would be easy for them to obtain from a different country.