Alan Collett

Was browsing the ATO website last night (as one does ...) ... and noted this Interpretative Decision, which appears to confirm that lump sum payments received by Aussie tax residents at retirement age deriving from pension schemes left behind in the UK can give rise to a tax liability in Australia under section 27CAA of the ITAA 1936:
http://law.ato.gov.au/atolaw/print.h...D20019%2F00001

I mention this as I know a number of people see final salary schemes as valuable (rightly in my view), and decide not to transfer their pension fund to Australia because of the attraction of such schemes => one shouldn't overlook the tax consequences of so doing.

As ever, those affected should take independent advice before making any final decisions.

Best regards.

GinaUK

Good to know that.

Also worth remembering: taking the lump sum is an option, i.e. not compulsory. If it gives rise to a tax liability in Oz, the person retiring could opt to take the full pension rather than a reduced pension plus lump sum. That way - no tax liability.

Gina

JAJ

You'd have a higher tax liability on the pension of course, but this could well be at lower tax rates.

Otherwise this is a good point. On top of that, the non-tax reasons to keep a final salary scheme would still appear to be quite attractive. Especially if there is a risk you may be living back in the UK at the time, or in a third country - in that case, having transferred all your pensions to Australia may be something you would regret.



Jeremy

Buzzy--Bee

OK, now I'm a bit confused. I have 2 final salary pensions and 6 money purchase pensions. Should I transfer the mp pensions to an oz scheme and leave the fs in the uk?

Thanks

Buzzy

Caroline G

You need to seek Independent Financial Advice from a qualified person. There are all sorts of rules & regulations ensuring that only those trained to do so can give such advice.

Buzzy--Bee

Thanks Caroline, I did that already. And they told me to put the whole lot in one pot and take it to Oz. But this thread seems to disagree with that advice.

So may I rephrase my question -

In the opinion of people on this forum, and fully accepting that this is not professional qualified advice offered or given - Should I transfer the mp pensions to an oz scheme and leave the fs in the uk?

Cheers

Buzzy

NedKelly

If you don't you will have to personal pay tax in Oz on any growth in the funds. Does that help?

Wol

Not on final salary schemes - that would be impossible to administer!

Buzzy--Bee

See what I mean?

Is there anyone who reallly knows the answer to this?

(See my earlier post above - In the opinion of people on this forum, and fully accepting that this is not professional qualified advice offered or given - Should I transfer the mp pensions to an oz scheme and leave the fs in the uk?
.)

Even the experts seem to be in disagreement. Maybe nobody knows the answer.

Cheers guys

Buzzy

JAJ

I'm not an expert but as a general rule I'd suggest that one should look to transfer private pensions, while with final salary schemes, consider leaving them where they are.

There are potentially lots of exceptions to these rules of thumb, including:
- if you are not going to be a permanent resident in Australia
- if you are close to retirement age
- if you feel there's a good chance you will ultimately leave Australia.
- do you want *all* your retirement provision to be in the same country? If you have multiple pension schemes, maybe transfer some and leave others?

As for finding an expert, you need to come across someone who is familiar with both UK and Australian rules. Alan Collett does do business in this area, but realistically you can't expect an expert to give very detailed, case-specific advice on an online forum.



Jeremy

Buzzy--Bee

Thanks Jeremy, that agrees with what I thought, but disagrees with what an Australian/UK specialist tax advisor said to me last week. Hence my statement about maybe nobody knowing the answer. But rest assured I am grateful for your, Alan's, George's and everyone's opinions. I will seek expert advice when the time comes, but it is a concern to me when the experts are not in agreement with each other and this seems to be a very complex subject, as I guess any tax query is!

Cheers

Buzzy.

NedKelly

Would you mind telling us the name of your Australian/UK specialist tax advisor?

Buzzy--Bee

Sure, I went to see Michelle Kelly of afsnorthsydney - it was a free 1.5 hour initial consultation. She is based in London, try [email protected]. This is, however, neither a recommendation nor otherwise.

Cheers

Buzzy

Fardell

I think the problem here is that the answer is that ... "it depends" .. on a whole raft of factors as someone mentioned earlier - including whether you want an exchange rate hedge. I have retained a UK pension simply because I don't want all my eggs in the same Australian dollar basket. And, as I understand it, you will not be taxed on the incremental annual increase in a foreign "employer sponsored pension". Not because it's too difficult (although it would be!), but because it is a legislated exemption. See www.exfin.com/super-intoptions.php - it's a site largely for Australian expats but I believe it's applicable. What I am not sure about is private pensions and how the exemption applies to them.

I think the most important thing to bear in mind is that Australia offers tax relief to retirement earnings - and you need to make sure you are making the most of that tax relief. That may mean transferring in some part of your overseas pension just before retirement when you know how close you are to your limits (RBL's etc.,).

I think the moral of the story is that you want good financial/tax advice and not from a local planner in Australia who largely looks after domestic clients. And given this a big, continuing issue for many people it would be nice if an "expert" could at least summarise - somewhere - the top ten factors to consider when reviewing this issue. The problem is that once you move the money into Australia it largely tied up from then on - with little/no flexibility.


and i would