ozzieeagle

Whoops my memory fails me.... Bye bye Shane Mc

Enjoy the rental in Brissy... You'll never be able to afford anything else eh?

marty.d

Thanks for the links. I did have a look previously at the ATO site regarding foreign income and it does take a bit to divulge and fully understand. This is something I'm working on and taking time to assess how it all applies to my situation.
Cheers,
Martin

marty.d

Hi Again,
A lot of information and thanks for your input. I'll probably spend some time assessing my situation and how this might impact me. Like I mentioned earlier I think my UK pensions are going to be difficult to manage with regards to tax liability, especially since two are defined benefit and the other two combined currently exceed 60K and minding my UK state pension will kick in at 67. My initial thoughts are to invest in the family home and top up my super keeping as near the income tax threshold as possible hence limiting my tax.
I think there may be some kind of reciprocal agreement with Tax in that I will only be taxed in one country. If taxed at source then I would be given a tax credit in Oz or you can apply to have the tax refunded and taxed here in Oz, something along those lines but don't quote me on that.

Thanks,
Martin

ozzieeagle

When it comes to tax on UK and even Australian Super, it really does pay dividends to use and get the advice of a specialist in that particular field. I think your needs would be served really well by giving the following person a bell. She's tenacious, efficient and will definitely do the best she can for you.

Took me a long while to find her and I doubt you'll be able to find anyone as accomplished in this specialist field. I couldn't find anyone in Melbourne to help at her level of expertise. She sorted out my tax issues in relation to my UK Private Pension and dealt with my tax in both the UK and Australia. My own accountant couldn't help me with this, so for the one specific year when I landed the UK Pension I used her for my Australian Tax return during that year.

I'm back to my usual guy now, who is one of the few accountants I know of that can get the best out of Centrelink and its machinations. The vast majority of accountants won't go near Centerlink dealings.

Here's that recommendation.


Jane Cooper
AIPA, ATT CTA (UK & Australia) & DIP of Financial Planning
Principal - GM Tax
Member of the UK Chartered Institute of Taxation , the Taxation Institute of Australia, and the Institute of Public Accountants.
3/267 St Georges Terrace, Perth, WA 6000, Australia - T +61 (0)8 9261 7762; M +61 (0)434 977 842
Postal address: PO Box 2351, Ocean Keys, Clarkson, WA6030, Australia




The other suggestion I have is once you have your UK super and pensions sorted, Is to join the following website and ask any specific questions regarding your own requirements and plans for the future. Quite often he will answer specific questions personally.

Noel Whittaker | Home - Finance and Investment Expert

Finally when you come close to Pension age, Even if you feel you won't qualify for the Australian Government Pension, contact centerlink and ask for an appointment to their Financial Information Service. It's a free service and you'll be amazed how helpful they can be. Both Noel Whittiker and Scott Pape (AKA the barefoot investor) recommend people do this. I have followed their advice and all of my and my wifes future super payments and Lump Sum withdrawals are now guaranteed to be free of any future income tax liability. They will also advise on how you can manoeuvre your finances if possible to at least get access to the seniors Pension card. It's almost the opposite of what you would expect of them. Definitely not a waste of time and they have some unexpected and really useful advice.



Quite a few hoops to jump through yet and it can be daunting, however, once you are on the other side of the setting up of one's finances in retirement, then it's time to relax and enjoy the benefits of your working life.

Kiwipaul

Yes their is. When you first draw your UK pension and it is sent to Oz, it will be taxed in the UK automatically until you complete and return a Form Australia-Individual 2003 downloaded from the UK tax office. Once this is returned to the UK they will stop taxing you in the UK but you will have to declare it as taxable income in Oz. They will also repay any tax that they have already deducted.

If you are aged 65 years or over, you may also be eligible for the Seniors & Pensioners Tax Offset (SAPTO), which effectively gives you access to a higher tax-free threshold, but is not available if your income exceeds a certain level. You can basically earn (pension, bank interest, dividends, etc) approx $40,000 before you are liable for Oz income tax.

Any Oz Super you receive is totally tax free and is NOT included in your taxable income.

ozzieeagle

Great pointers. SAPTO is now capped at 50K Plus for a single person. Plus the other major factor as with all things to do with Australian Pensioners they have a dual accessible amount total for couples, The SAPTO threshold for couples is in excess of 83K.

The other factor is that Aus Super withdrawals and deductions are tax free, but only up to a point.... above which I guess most people won't or shouldn't really begrudge paying tax... The tax free threshold cuts out at 1,600,000 AUD in Super.... again for an individual. It's possible to allievate this by making personal spouse contributions: paid directly to your spouse’s account as non-concessional contributions or Contribution splitting: you can split your concessional (before tax) contributions with your spouse. The maximum amount you contribute to your spouses super at any one time is 330K .... however, there are hoops to jump through like income limits and yearly tax thresholds so the best people to talk to about that are the Superannuation companies themselves.

Make sure you check all of these figures with your own accountant and advisors, even the super companies themselves. As individuals and couples needs vary from person to person. You'll find that the government figures and limits quoted are kosher.

m_j_t

So, I'm approaching 65 and have 3 UK pensions schemes that will total about 17K (uk)

Scheme 1 joined May 1977, left Dec 1986 approx 11.5K (uk) pa. Have claim form with 2 options the 11.5K and 9K with 60K tax-free lump sum (so any amount from 0-60K possible).
Scheme 2 joined Oct 1989, left Jun 1997 approx 3.5K (uk) pa (according to website). Awaiting details after enquiring but I guess about 1/3rd of scheme 1.
Scheme 3 for the intervening period. This ended up being an S32 (pep) and matured in 2017 and has been paying out (after going to UK Pension Ombudsman) since at approx. 1.7K p.a.
I believe I am due 75% of the UK State Pension (didn't consider it advantageous to make it up to 100%).
I have about 320K (aud) in super.

Partner is 17 years my junior (about 200K in super), we have been living on that sole income for 12 years and have some 170K (aud) in savings. Mortgage is a pitiful 2c (just can't be bothered to close it), so we own our home.

So tax-free lump sum isn't needed/wanted unless there is a distinct advantage. So the hassle-free options as just taking the full amount on a monthly basis appears to be the preference (definitely NOT interested in QROPS). Scheme 3 is already paying, although I did take a tax-free lump sum (approx. 8K (uk) and that was mainly because it was for a second plan added for compensation for bad financial advice and would all but cover the cost of a new car).

I have the 2300 form (downloaded it earlier and assume that it would apply as I am slightly over the UK lower tax threshold, I would probably be getting a few thousand over the lower tax threshold here around 21K (aud) until I'm 67 when I would then have to).

I don't think the SAPTO would apply (not a AU Senior just a NSW Senior).

I'm interested in topping up the spouses super as we don't really need the extra income (probably as pre-tax from her pay and use the extra income to compensate).

Anything wrong with just taking the monthly?

ozzieeagle

Best thing for you to do is to talk to the Seniors Financial Information Service at Centrelink. Nothing wrong with taking the UK private pension money as monthly income before you turn 67, After 67 any income affects the Australian Government Pension under their income test thresholds. The cut-off income figure for the Australian Government Pension is circa 3100 AUD combined for a couple per fortnight. So even if your wife is under Pension age that joint income figure still applies, as your Aus Government pension is paid at the rate of a couple. It all depends on how close your combined UK private pensions are to the Australian Government pension income tests.... Remember that once you reach the official pension age the UK Government Pension also applies as income and you have to claim your UK government pension before the Australian Government Pension is allowed to be claimed.

Definitely talk to Centerlinks FIS as they will be surprisingly helpful on how you can maximise any claim you have to the Australian Government Pension. It's just a case of phoning and making an appointment.

I personally have no idea about the UK side of pensions in relation to tax. Been here since 1980 and I don't have any UK income so have never looked into its tax system. So check the UK side in relation to taking the monthly pensions first with someone that knows the UK tax system.

marty.d

I think monthly is a good option if the plan is to stay within the tax threshold if your pensions monthly income sum total allow so.
In respect of smaller defined contribution pension funds of which I have two, my plan is to see if I can take yearly lump sums over "X" amount of years until the pension fund is zero (the lump sum amounts to remain below the tax threshold) then I'll access my other defined benefit pensions as required. My overseas UK income hopefully still remaining below the tax threshold which is by my current estimate borderline. This needs a little more investigation as to whether my better halves income will be included in the calculation.

marty.d

Thanks for the recommendations.
I'm now in the process of contacting two of my small UK pension fund providers to see what my access options are. Once I have this clarified I can start to put together my strategy.
It's definitely not a one size fits all when it comes to retirement planning..... ;-)
Cheers,
Martin

m_j_t

I don't think I can stay within the threshold, even if I took the max tax free. Without any tax free UK income would be very close to 17K ukp so well above the 12570 tax free threshold. With the max taken I think it would drop to 13.6K so still above and therefore well above the AU 18200 threshold.

Been doing some calculations, will certainly submit the Double taxation form, without I believe I'd pay something like 3.9K (au in taxes) with the form 2.6K (not including Medicare levy or the low income offset in either case).