Kimi-Deacon

My Sister and her OH are considering moving to NZ, he will be leaving the military with a pension and gratuity, can anybody give me some information on the tax situation regarding both the pension and the gratuity.

1 Will he pay tax on his pension if working in NZ (or will he get this tax free if he declares he wont claim NZ Benefits)

2 If he is in NZ at the time of receiving his gratuity, will he have to pay tax to the NZ Tax man.

Would appreciate any help regarding this matter.

lapsed kiwi

1 - I think you can exempt overseas earnings provided you don't claim tax credits such as WFF
2 - I would have thought so, if he declares it as income.

teebrown

We too are Military, we will be having our lump sum put into a UK bank account and then transferred over and then our monthly pension will also be put into a UK account, this we hope to save and only use it when necessary, we have a Nationwide account so we can us it in NZ.

NZ and UK have a double tax law (i believe), where you only get taxed in one of the countries - it's all very confusing and we are still looking into it.

Good luck

LoobyHighland

Hiya, my OH just left the forces and we're emigrating to NZ in Jan '09. We were worried about his pension etc, but if you contact the pension provider/office they'll be able to tell you what will happen. Ours will still be index-linked even though we're overseas, and theres only one tax taken. But the office will be able to tell you all the facts. We found them very helpful indeed. Hope this helps a wee bit, Lou

Badass Barrass

The UK and NZ tax people have an agreement where they exchange details on persons coming down under. You should have a 4 year tax exemption on your pension provided you dont claim any NZ benefits. Your pension provider Xafinity can pay into your nz account or UK account. In 4 years time even if your pension is going into a UK account it will still be classed as taxable income in NZ. My advice is if you come to NZ that pension is a must if you want to survive. Good luck!

LiffyB

Does anyone have an update on this situation please? we are coming over at the end of July and would like some info before we leave the UK. OH is talking to the military and IR at the moment for some clarification. If we get any I will post on the forum - but in the mean time if anyone has any personal experience could they let us know?

Thanks

Liff

alanmacc

Hi I have just begun the process of transferring my pension over from the UK, albeit non military, but what I have found out is :

you can access 40% of the pension right away if you meet the criteria. Please note that to avoid penalties which are 70% tax on funds drawn from the 40% accessible amount, it must be five complete UK tax years from when you left the UK,(A UK tax year runs from 6th April to 5th April the following year)

The remainder cannot be accessed until age 55 (or 5 full UK tax years from when you left the UK), whichever is the later.

Don't know if this is any use to you or not but thought id drop it in

Uncle Albert

Hi Liff,

I received my lump sum before arriving in NZ. This was not taxed further as it is treated in the same way as any other funds you bring over from your bank account(s). If you receive it whilst in the UK, I do not know.

The pension is a different matter. I get mine paid into a UK account, where it pays UK items. Not one penny reaches these shores. But as it is an overseas income I have to declare it. The UK & NZ do have a tax treaty. How this affects myself is that any tax I pay in the UK on the pension, is credited (knocked off) my NZ tax bill. Basically if you pay 22% on the pension in the UK and you pay 39% in NZ you owe the IRD 17%. All this is worked out annually on your IRD tax return. Look at www.ird.govt.nz , form IR 3G, individual income tax return 2009. This year as previous years I shall be paying a hefty provisional tax bill which is paid in 3 installments throughout the year in advance. Working through the guide would give you an indication.

When I informed the UK tax office of my move, they advised me to inform the IRD. If I did not, they would, seemed a threat really, but I complied.

You may be entitled to the first 4 years of overseas income tax free. The IRD web site will give you more information on this.

Hope this helps.

LiffyB

Uncle Albert!

We are now going through everything - we have spoken to someone already out there who gets their pension put into an account offshore in Jersey - tax free and transfers when and if they need it (and when the exchange rate is favourable). If we find out more we will let you know. We don't intend to touch our gratuity so we will leave it where we will make the most return for our money - and transfer interest when necessary.

Liff

Kimi-Deacon

Thanks everyone for all the replies will leave big sis aka LiffyB to ask any other relevant questions now.