Pension transfers - article in news.com.au
Apr 12th 2004, 7:56 pm
#1
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Location: West Melbourne
Posts: 462
Pension transfers - article in news.com.au
Stumbled upon this article published last year. Thought that some poepl might find it useful for background info:
http://finance.news.com.au/common/st...E23649,00.html
Neil
http://finance.news.com.au/common/st...E23649,00.html
Neil
Apr 13th 2004, 12:50 am
#2
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Joined: Jan 2003
Location: Brisbane
Posts: 1,576
If I read the article correctly pensions that you leave in the UK are not liable for tax in Oz on a yearly basis and in the near future the tax rate is going to drop to 15% of the gain when you transfer (or if you transfer).
My understanding WAS that pensions left in the UK incurred taxes each year on any gain.
Totally confused.
My understanding WAS that pensions left in the UK incurred taxes each year on any gain.
Totally confused.
Apr 13th 2004, 3:04 am
#3
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Posts: n/a
Originally posted by Kiwipaul
If I read the article correctly pensions that you leave in the UK are not liable for tax in Oz on a yearly basis and in the near future the tax rate is going to drop to 15% of the gain when you transfer (or if you transfer).
My understanding WAS that pensions left in the UK incurred taxes each year on any gain.
Totally confused.
If I read the article correctly pensions that you leave in the UK are not liable for tax in Oz on a yearly basis and in the near future the tax rate is going to drop to 15% of the gain when you transfer (or if you transfer).
My understanding WAS that pensions left in the UK incurred taxes each year on any gain.
Totally confused.
"Up until now, it has been less attractive to bring the money as a lump sum to Australia because you are hit with tax on the earnings from your superannuation from the day that you became an Australian resident"
This piece "the transferred monies are viewed as undeducted contributions, so they will not attract tax when you are in retirement mode" does seem to say that they won't be taxed once you retire. I wonder how accurate that is ? Would the ATO give away a possible chance of revenue ? However, if it is treated as drawing down on Capital then that part can't be taxed.
But surely any increase in the fund value will be taxed.
Apr 13th 2004, 7:40 am
#4
Banned
Joined: Dec 2003
Posts: 150
Originally posted by ABCDiamond
This piece indicates that tax was only paid when you bring the money to Australia.
"Up until now, it has been less attractive to bring the money as a lump sum to Australia because you are hit with tax on the earnings from your superannuation from the day that you became an Australian resident"
This piece "the transferred monies are viewed as undeducted contributions, so they will not attract tax when you are in retirement mode" does seem to say that they won't be taxed once you retire. I wonder how accurate that is ? Would the ATO give away a possible chance of revenue ? However, if it is treated as drawing down on Capital then that part can't be taxed.
But surely any increase in the fund value will be taxed.
This piece indicates that tax was only paid when you bring the money to Australia.
"Up until now, it has been less attractive to bring the money as a lump sum to Australia because you are hit with tax on the earnings from your superannuation from the day that you became an Australian resident"
This piece "the transferred monies are viewed as undeducted contributions, so they will not attract tax when you are in retirement mode" does seem to say that they won't be taxed once you retire. I wonder how accurate that is ? Would the ATO give away a possible chance of revenue ? However, if it is treated as drawing down on Capital then that part can't be taxed.
But surely any increase in the fund value will be taxed.
However, the downside at present is that in the year of transfer, the money received is added to your Australian income and this can have a direct effect on any Centrelink benefits you might have otherwise received. But as Ford says: "It takes some pain now for a lot of gain in the future."
Cheers
Apr 13th 2004, 7:41 am
#5
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Joined: Jan 2003
Location: Brisbane
Posts: 1,576
Originally posted by ABCDiamond
This piece indicates that tax was only paid when you bring the money to Australia.
"Up until now, it has been less attractive to bring the money as a lump sum to Australia because you are hit with tax on the earnings from your superannuation from the day that you became an Australian resident"
This piece "the transferred monies are viewed as undeducted contributions, so they will not attract tax when you are in retirement mode" does seem to say that they won't be taxed once you retire. I wonder how accurate that is ? Would the ATO give away a possible chance of revenue ? However, if it is treated as drawing down on Capital then that part can't be taxed.
But surely any increase in the fund value will be taxed.
This piece indicates that tax was only paid when you bring the money to Australia.
"Up until now, it has been less attractive to bring the money as a lump sum to Australia because you are hit with tax on the earnings from your superannuation from the day that you became an Australian resident"
This piece "the transferred monies are viewed as undeducted contributions, so they will not attract tax when you are in retirement mode" does seem to say that they won't be taxed once you retire. I wonder how accurate that is ? Would the ATO give away a possible chance of revenue ? However, if it is treated as drawing down on Capital then that part can't be taxed.
But surely any increase in the fund value will be taxed.
If that is the case for pensions does the same apply to Peps, ISA, endowments, etc that are in the UK but are designed for capital gain with no income.
I realise that you might be liable for tax when you cash them in but previous posts have given the impression that they are taxed each year in Oz on the gain.
Can someone clarify this as it's quite a major factor in transferring or not.
Apr 13th 2004, 7:55 am
#6
Guest
Posts: n/a
Kiwipaul, if the statement "So basically if you leave your pension in the UK (say) it's not taxed in Oz untill you start transferring it. is correct, then what if you leave the money in the UK, and use a UK credit card in OZ to spend it ?
The money never arrives in OZ, therefore it isn't taxed ??
I agree, this does need full clarificaton.
However, here are some ATO links, in case anyone is interested in some bedtime reading
General treatment of foreign pensions and annuities
Foreign source income - individuals
Foreign source income - other than employment, pensions and annuities
Foreign tax credits
The money never arrives in OZ, therefore it isn't taxed ??
I agree, this does need full clarificaton.
However, here are some ATO links, in case anyone is interested in some bedtime reading
General treatment of foreign pensions and annuities
Foreign source income - individuals
Foreign source income - other than employment, pensions and annuities
Foreign tax credits
Apr 13th 2004, 8:58 am
#7
Just Joined
Joined: Apr 2004
Posts: 16
Trabsfer of pension entitlements
Just thought I would give my perspective and actual transfer experience as I have done this for clients in the past.
1. You can leave your pension entitlements in the uk, and in some cases you have to if they are known as SERPS contributions, effectively not in a private fund.
If the private fund allows you to transfer, you can still leave your money where it is with no tax penalty. In retirement, you can still take your pensions as you would living in the UK. because of the double taxation agreement, you would receive the penion in australia as if you were receiving salary or an income and normal tax rules would apply.
if you decide to take it as a lump sum, i.e as a transfer or rollover to an Australian fund, the 6 month rule comes into affect:
This is detailed in the attachment:
Basically the following occurs:
1. If you transfer the amount within 6 months of become an Australian tax resident, all monies come across tax free and are seen as Undeducted (tax paid) contributions. Very effective in retirement for tax purposes plus if you withdraw these funds in retirement you will receive them tax free.
2. If the funds come across after 6 months, the growth on the funds which you have received since you became a resident would have to be declared in your tax return and you could be taxed at 48.5% on the growth.. The downside to it all is that the funds coming across could not be utilised to pay this liability and therefore you would have to pay it out of your own pocket.
New legislation that has just hit my desk which has been put to govt but passed is that the growth should be taxed at 15% like Australia residents get taxed and it is taken from the transferred funds. this is a win for foreign transfers as it reduces any tax liability plus allows you to access your transfer funds to pay the liability.
I have attached the paper outlining the changes.
Most people would think that six months is ample time to transfer the funds. In my experience as an adviser, some funds can take longer than that just to reply. each fund has its own requirements to release funds, as specified under the individual trust deeds. Minimum requirements are:
1. National Insurance form
2. Letter from current Australian employer saying you are employed
3. Tax return from Australia or tax file number letter.
4. Rollover forms to funds, saying where the funds are to be transferred.
5. Letter from Australian receiving fund saying they can accept the money.
This will get the ball rolling well and truly. Key to it is to get the requirements before you leave the UK if applicable, also to get a quote on retirement pension benefits as you give these up once you rollover the funds.
If you would like to chat further about this, just email me at [email protected] or call me at +612 9239 0011.
I would be happy to assist.
Regards
George Caredes
1. You can leave your pension entitlements in the uk, and in some cases you have to if they are known as SERPS contributions, effectively not in a private fund.
If the private fund allows you to transfer, you can still leave your money where it is with no tax penalty. In retirement, you can still take your pensions as you would living in the UK. because of the double taxation agreement, you would receive the penion in australia as if you were receiving salary or an income and normal tax rules would apply.
if you decide to take it as a lump sum, i.e as a transfer or rollover to an Australian fund, the 6 month rule comes into affect:
This is detailed in the attachment:
Basically the following occurs:
1. If you transfer the amount within 6 months of become an Australian tax resident, all monies come across tax free and are seen as Undeducted (tax paid) contributions. Very effective in retirement for tax purposes plus if you withdraw these funds in retirement you will receive them tax free.
2. If the funds come across after 6 months, the growth on the funds which you have received since you became a resident would have to be declared in your tax return and you could be taxed at 48.5% on the growth.. The downside to it all is that the funds coming across could not be utilised to pay this liability and therefore you would have to pay it out of your own pocket.
New legislation that has just hit my desk which has been put to govt but passed is that the growth should be taxed at 15% like Australia residents get taxed and it is taken from the transferred funds. this is a win for foreign transfers as it reduces any tax liability plus allows you to access your transfer funds to pay the liability.
I have attached the paper outlining the changes.
Most people would think that six months is ample time to transfer the funds. In my experience as an adviser, some funds can take longer than that just to reply. each fund has its own requirements to release funds, as specified under the individual trust deeds. Minimum requirements are:
1. National Insurance form
2. Letter from current Australian employer saying you are employed
3. Tax return from Australia or tax file number letter.
4. Rollover forms to funds, saying where the funds are to be transferred.
5. Letter from Australian receiving fund saying they can accept the money.
This will get the ball rolling well and truly. Key to it is to get the requirements before you leave the UK if applicable, also to get a quote on retirement pension benefits as you give these up once you rollover the funds.
If you would like to chat further about this, just email me at [email protected] or call me at +612 9239 0011.
I would be happy to assist.
Regards
George Caredes
Originally posted by ABCDiamond
Kiwipaul, if the statement "So basically if you leave your pension in the UK (say) it's not taxed in Oz untill you start transferring it. is correct, then what if you leave the money in the UK, and use a UK credit card in OZ to spend it ?
The money never arrives in OZ, therefore it isn't taxed ??
I agree, this does need full clarificaton.
However, here are some ATO links, in case anyone is interested in some bedtime reading
General treatment of foreign pensions and annuities
Foreign source income - individuals
Foreign source income - other than employment, pensions and annuities
Foreign tax credits
Kiwipaul, if the statement "So basically if you leave your pension in the UK (say) it's not taxed in Oz untill you start transferring it. is correct, then what if you leave the money in the UK, and use a UK credit card in OZ to spend it ?
The money never arrives in OZ, therefore it isn't taxed ??
I agree, this does need full clarificaton.
However, here are some ATO links, in case anyone is interested in some bedtime reading
General treatment of foreign pensions and annuities
Foreign source income - individuals
Foreign source income - other than employment, pensions and annuities
Foreign tax credits
Apr 13th 2004, 10:21 am
#8
Banned
Joined: Dec 2003
Posts: 150
Re: Trabsfer of pension entitlements
Originally posted by GoodwinFS
Just thought I would give my perspective and actual transfer experience as I have done this for clients in the past.
1. You can leave your pension entitlements in the uk, and in some cases you have to if they are known as SERPS contributions, effectively not in a private fund.
If the private fund allows you to transfer, you can still leave your money where it is with no tax penalty. In retirement, you can still take your pensions as you would living in the UK. because of the double taxation agreement, you would receive the penion in australia as if you were receiving salary or an income and normal tax rules would apply.
if you decide to take it as a lump sum, i.e as a transfer or rollover to an Australian fund, the 6 month rule comes into affect:
This is detailed in the attachment:
Basically the following occurs:
1. If you transfer the amount within 6 months of become an Australian tax resident, all monies come across tax free and are seen as Undeducted (tax paid) contributions. Very effective in retirement for tax purposes plus if you withdraw these funds in retirement you will receive them tax free.
2. If the funds come across after 6 months, the growth on the funds which you have received since you became a resident would have to be declared in your tax return and you could be taxed at 48.5% on the growth.. The downside to it all is that the funds coming across could not be utilised to pay this liability and therefore you would have to pay it out of your own pocket.
New legislation that has just hit my desk which has been put to govt but passed is that the growth should be taxed at 15% like Australia residents get taxed and it is taken from the transferred funds. this is a win for foreign transfers as it reduces any tax liability plus allows you to access your transfer funds to pay the liability.
I have attached the paper outlining the changes.
Most people would think that six months is ample time to transfer the funds. In my experience as an adviser, some funds can take longer than that just to reply. each fund has its own requirements to release funds, as specified under the individual trust deeds. Minimum requirements are:
1. National Insurance form
2. Letter from current Australian employer saying you are employed
3. Tax return from Australia or tax file number letter.
4. Rollover forms to funds, saying where the funds are to be transferred.
5. Letter from Australian receiving fund saying they can accept the money.
This will get the ball rolling well and truly. Key to it is to get the requirements before you leave the UK if applicable, also to get a quote on retirement pension benefits as you give these up once you rollover the funds.
If you would like to chat further about this, just email me at [email protected] or call me at +612 9239 0011.
I would be happy to assist.
Regards
George Caredes
Just thought I would give my perspective and actual transfer experience as I have done this for clients in the past.
1. You can leave your pension entitlements in the uk, and in some cases you have to if they are known as SERPS contributions, effectively not in a private fund.
If the private fund allows you to transfer, you can still leave your money where it is with no tax penalty. In retirement, you can still take your pensions as you would living in the UK. because of the double taxation agreement, you would receive the penion in australia as if you were receiving salary or an income and normal tax rules would apply.
if you decide to take it as a lump sum, i.e as a transfer or rollover to an Australian fund, the 6 month rule comes into affect:
This is detailed in the attachment:
Basically the following occurs:
1. If you transfer the amount within 6 months of become an Australian tax resident, all monies come across tax free and are seen as Undeducted (tax paid) contributions. Very effective in retirement for tax purposes plus if you withdraw these funds in retirement you will receive them tax free.
2. If the funds come across after 6 months, the growth on the funds which you have received since you became a resident would have to be declared in your tax return and you could be taxed at 48.5% on the growth.. The downside to it all is that the funds coming across could not be utilised to pay this liability and therefore you would have to pay it out of your own pocket.
New legislation that has just hit my desk which has been put to govt but passed is that the growth should be taxed at 15% like Australia residents get taxed and it is taken from the transferred funds. this is a win for foreign transfers as it reduces any tax liability plus allows you to access your transfer funds to pay the liability.
I have attached the paper outlining the changes.
Most people would think that six months is ample time to transfer the funds. In my experience as an adviser, some funds can take longer than that just to reply. each fund has its own requirements to release funds, as specified under the individual trust deeds. Minimum requirements are:
1. National Insurance form
2. Letter from current Australian employer saying you are employed
3. Tax return from Australia or tax file number letter.
4. Rollover forms to funds, saying where the funds are to be transferred.
5. Letter from Australian receiving fund saying they can accept the money.
This will get the ball rolling well and truly. Key to it is to get the requirements before you leave the UK if applicable, also to get a quote on retirement pension benefits as you give these up once you rollover the funds.
If you would like to chat further about this, just email me at [email protected] or call me at +612 9239 0011.
I would be happy to assist.
Regards
George Caredes
Regards
Apr 13th 2004, 12:14 pm
#9
Migration Agent
Joined: May 2002
Location: Offices in Melbourne, Brisbane, Perth, Geelong (Australia), and Southampton (UK)
Posts: 6,459
Re: Trabsfer of pension entitlements
Please please please don't forget the Foreign Investment Fund Rules as well. The article from the newspaper and the proposed changes in the law relate to section 27CAA of the Income Tax Assessment Act 1936 - the FIF Rules are another tax issue that should not be overlooked if you retain certain pensions and investments outside Australia.
And the proposed new tax legislation has been in the offing for the last 6 months or so (see the Federal Treasurer's website) ... it is merely that the legislation enacting these changes is about to be presented to the Federal Parliament.
Best regards.
And the proposed new tax legislation has been in the offing for the last 6 months or so (see the Federal Treasurer's website) ... it is merely that the legislation enacting these changes is about to be presented to the Federal Parliament.
Best regards.
Originally posted by GoodwinFS
Just thought I would give my perspective and actual transfer experience as I have done this for clients in the past.
1. You can leave your pension entitlements in the uk, and in some cases you have to if they are known as SERPS contributions, effectively not in a private fund.
If the private fund allows you to transfer, you can still leave your money where it is with no tax penalty. In retirement, you can still take your pensions as you would living in the UK. because of the double taxation agreement, you would receive the penion in australia as if you were receiving salary or an income and normal tax rules would apply.
if you decide to take it as a lump sum, i.e as a transfer or rollover to an Australian fund, the 6 month rule comes into affect:
This is detailed in the attachment:
Basically the following occurs:
1. If you transfer the amount within 6 months of become an Australian tax resident, all monies come across tax free and are seen as Undeducted (tax paid) contributions. Very effective in retirement for tax purposes plus if you withdraw these funds in retirement you will receive them tax free.
2. If the funds come across after 6 months, the growth on the funds which you have received since you became a resident would have to be declared in your tax return and you could be taxed at 48.5% on the growth.. The downside to it all is that the funds coming across could not be utilised to pay this liability and therefore you would have to pay it out of your own pocket.
New legislation that has just hit my desk which has been put to govt but passed is that the growth should be taxed at 15% like Australia residents get taxed and it is taken from the transferred funds. this is a win for foreign transfers as it reduces any tax liability plus allows you to access your transfer funds to pay the liability.
I have attached the paper outlining the changes.
Most people would think that six months is ample time to transfer the funds. In my experience as an adviser, some funds can take longer than that just to reply. each fund has its own requirements to release funds, as specified under the individual trust deeds. Minimum requirements are:
1. National Insurance form
2. Letter from current Australian employer saying you are employed
3. Tax return from Australia or tax file number letter.
4. Rollover forms to funds, saying where the funds are to be transferred.
5. Letter from Australian receiving fund saying they can accept the money.
This will get the ball rolling well and truly. Key to it is to get the requirements before you leave the UK if applicable, also to get a quote on retirement pension benefits as you give these up once you rollover the funds.
If you would like to chat further about this, just email me at [email protected] or call me at +612 9239 0011.
I would be happy to assist.
Regards
George Caredes
Just thought I would give my perspective and actual transfer experience as I have done this for clients in the past.
1. You can leave your pension entitlements in the uk, and in some cases you have to if they are known as SERPS contributions, effectively not in a private fund.
If the private fund allows you to transfer, you can still leave your money where it is with no tax penalty. In retirement, you can still take your pensions as you would living in the UK. because of the double taxation agreement, you would receive the penion in australia as if you were receiving salary or an income and normal tax rules would apply.
if you decide to take it as a lump sum, i.e as a transfer or rollover to an Australian fund, the 6 month rule comes into affect:
This is detailed in the attachment:
Basically the following occurs:
1. If you transfer the amount within 6 months of become an Australian tax resident, all monies come across tax free and are seen as Undeducted (tax paid) contributions. Very effective in retirement for tax purposes plus if you withdraw these funds in retirement you will receive them tax free.
2. If the funds come across after 6 months, the growth on the funds which you have received since you became a resident would have to be declared in your tax return and you could be taxed at 48.5% on the growth.. The downside to it all is that the funds coming across could not be utilised to pay this liability and therefore you would have to pay it out of your own pocket.
New legislation that has just hit my desk which has been put to govt but passed is that the growth should be taxed at 15% like Australia residents get taxed and it is taken from the transferred funds. this is a win for foreign transfers as it reduces any tax liability plus allows you to access your transfer funds to pay the liability.
I have attached the paper outlining the changes.
Most people would think that six months is ample time to transfer the funds. In my experience as an adviser, some funds can take longer than that just to reply. each fund has its own requirements to release funds, as specified under the individual trust deeds. Minimum requirements are:
1. National Insurance form
2. Letter from current Australian employer saying you are employed
3. Tax return from Australia or tax file number letter.
4. Rollover forms to funds, saying where the funds are to be transferred.
5. Letter from Australian receiving fund saying they can accept the money.
This will get the ball rolling well and truly. Key to it is to get the requirements before you leave the UK if applicable, also to get a quote on retirement pension benefits as you give these up once you rollover the funds.
If you would like to chat further about this, just email me at [email protected] or call me at +612 9239 0011.
I would be happy to assist.
Regards
George Caredes
