If you transfer your pension to Australia

• In most cases there are major tax benefits in transferring pensions to Australia. Australia introduced legislation (with effect from 1 July 2007) to encourage people to become self sufficient in retirement, and therefore gave pension or superannuation funds major tax free benefits on retirement. When you reach pensionable age or meet a condition of release you can receive 100% of what you transferred tax free.
• Prior to retirement, earnings are taxed in the fund at 15%.
• If you do transfer your pension fund to Australia, it should be transferred to a QROPS (Qualifying Recognised Overseas Pension Scheme). This is an Australian superannuation scheme that has obtained approval from HM Revenue & Customs. (We only deal with funds that have QROPS status).
• Currently, Australia imposes limits on the amount that can be transferred tax free to Australia. This is currently $150,000 per annum or $450,000 initially but with no further contributions for 2 years.

  The value that represents the growth component of the fund since your date of residency to the actual date of transfer will not form part of these contributions limits.

  However, we have arrangements in place to allow for transfers of amounts in excess of these limits to a UK holding fund from which maximum allowable payments to the Australian fund are made.

• If you transfer your funds to Australia after 6 months of tax residency, you are taxable on the growth since that date. You can elect for the superannuation fund to pay the tax on the growth at 15% or you can be taxed personally at your marginal rate of tax, whichever is the lower.

If you leave your pension in the UK

• When you reach retirement, in most cases the lump sum you receive is not tax free in Australia. That part of the lump sum payment which represents the growth since the date of your Australian tax residency will be taxed at your marginal rates of tax in Australia.
• The balance of your fund in the UK will in most cases purchase an annuity, and provide you with a pension for the rest of your life. In most cases you will pay tax in the UK and in Australia on your annual pension, effectively at your marginal tax rate. Australia will give you credit for any tax paid in the UK and therefore you will not be double taxed. If you are a permanent resident you can elect under the terms of the double taxation agreement, to be exempt from paying tax in the UK and only be subject to tax in Australia. This is an election that needs to be applied for, we can assist if needed.
• In most cases the pension dies with the individual unless there is a spouse component of the pension. Even if this is the case the majority of pension funds only offer a 50% spouse pension and the balance is lost.
• If you decide to leave your funds in the UK you are subject to tax in Australia on the annual growth of the fund. The financial year runs from 1 July - 30 June, and the growth should be included on your tax return and subject to tax at your marginal rate of tax. (This will not apply to occupational pension schemes and holders of temporary residents visas and persons with total foreign investments less than $50,000).

Other points to consider

Before deciding whether to transfer your pension fund you should consider:-

• Exchange rates at time of transfer
• Earnings of funds in Australia and the UK
• Flexibility of funds in Australia and UK, (generally Australian funds are more flexible than those in the UK).

PLEASE NOTE:

We are not financial planners. We can refer you to reputable financial planner for investment and planning advice. Alternatively you may wish to use the services of your own financial planner.

The information above is general in its nature and does not constitute specific advice. You are encouraged to consult UHY Haines Norton for advice on specific matters.

We also refer you to our website www.uhyperth.com.au for much more information and advise needed when considering your pension and other taxation issues.

Can I transfer my British State Pension to Australia?
Unfortunately not! What we can do is obtain a state pension forecast on your behalf to show you what you are entitled to from the UK government when you retire. You may even consider topping up to maximise your entitlements.

I have a Jersey Pension; can I transfer this to Australia?
Yes, in most cases you can. We will advise you based on your personal circumstances.

Where do my funds go to in Australia?
Your funds have to be transferred to a superannuation fund in Australia which is a Qualifying Recognised Overseas Pension Scheme (more commonly referred to as a QROPS). There are a handful of these currently on the market. We are able to refer you to independent financial planners who will discuss these funds in more detail.

Can I transfer my UK funds to a Self Managed Superannuation Fund?
Yes you can. We can apply for QROPS status of either an existing Self Managed Superannuation Fund (SMSF) or set up a Self Managed Superannuation Fund on your behalf.

For more information on SMSFs please visit our website www.uhyperth.com.au.

Am I restricted on the amounts I can transfer to Australia?
With effect from 1 July 2007 the amounts contributed per person are reduced to A$150,000pa or you can pay A$450,000 as a lump sum payment with no further personal contributions for 3 years.

It should be noted however that the value that represents the growth component of the fund since your date of residency to the actual date of transfer will not form part of these contributions limits.

What if the value of my pension is greater than these limits?
Should the transfer value exceed these allowable limits the fund will tax the excess at 46.5%. However, we have arrangements in place to allow for transfers of amounts in excess of these limits to be transferred at a later date.

If I have transferred my pension and decide to return to the UK what happens to my pension?
It may be possible to transfer your pension to the UK depending on your current visa and on the conditions of the QROPS. However in certain cases there would be a tax charge of 30%.

Alternatively you can leave your Superannuation in Australia. This may not apply to Self Managed Superannuation Funds.

Who gets my superannuation when I die or am disabled?
In the event of death, your superannuation fund would be paid to your beneficiaries either as a lump sum or pension. The fund maintains its original value and 100% can be paid to your nominated dependant(s).

On disablement your superannuation can either be paid to you as a pension or lump sum and is tax free.

Is my superannuation subject to death duties in Australia?
There are no death duties in Australia. However certain payments to Non Death Benefit Dependants would be subject to tax at 15% or 30%.

What are the Fees of transferring my funds to Australia?
Our fees are based on the fund values. These start at $2,500 plus GST. You can arrange with the financial advisor for the fees to be paid on your behalf from the entry fees of the superannuation fund. See our website www.uhyperth.com.au or email pensions@uhyperth.com.au for a schedule of fees.

We have negotiated set rates with the various firms of independent financial planners we refer to. This will help to ensure fees are very competitive.

Are there any taxation implications in leaving my funds in the UK?
Yes, the Australian Tax Office (ATO) may tax you on the growth of the fund depending on your circumstances. The lump sum and annuity/pension income you will receive will also be subject to tax in Australia. For further information please refer to our website www.uhyperth.com.au.

Are there any taxation implications in bringing my funds to Australia?
The ATO allow you 6 months from the date of tax residency to transfer your funds to Australia. If you bring funds to Australia after 6 months you may be taxed on the growth of your fund depending on your circumstances. You can elect for the superannuation fund to pay the tax at 15% as opposed to you paying the tax at your marginal rates. For further information please refer to our website www.uhyperth.com.au.

Does it matter if I am on a temporary visa?
Yes, in most cases you will not be subject to tax on the growth of your pension fund each year. If you decide to bring your pension to Australia, from a tax point of view you should in most cases do so before obtaining your permanent residency as this will affect your tax position.

If I decide to transfer my pension to Australia, what should I do next?
Please contact us for a free consultation.

The firm provides a professional and efficient service at a competitive fee.

Why would you entrust UHY Haines Norton, Perth, with the transfer of your UK pension to Australia?

• We have expertise in both UK and Australian pension, superannuation and tax matters. The manager of our team is one of the very few members of the Chartered Institute of Taxation (UK) resident in Australia, with many years experience in the UK with International accounting firms.
• We can advise you on both UK and Australian tax issues before and after you migrate.
• We refer you to specially chosen financial planners, who are fully conversant with UK pension transfers and the various QROPS affairs. We have negotiated competitive rates for our clients.
• In conjunction with financial planners, we are able to assist in setting you up in a UK Inland Revenue approved Self Managed Superannuation Fund with QROPS status.
• We provide taxation advice and accounting services for self managed superannuation funds.

If you have a UK pension and want to understand the full implication of leaving your funds in the UK or transferring to Australia please call UHY Haines Norton for a consultation.