Superannuation in Australia

The national association was formed in 1984 and it is ranked in the top 25 accounting groups in Australia. We have offices in the six major cities and four regional locations.

UHY Haines Norton Perth provides a full range of migrant services related to tax planning, business migration and pension transfers. Migrants and overseas investors have benefited from our expertise for many years. Please note that we are not financial planners

PENSIONS
We assist clients find UK pension funds, obtain transfer valuations and provide a report to aid decision making. We occupy a unique position in the market; we are totally independent of any financial planning practice and superfund schemes. We can also refer you to specially chosen financial planners, who are fully conversant with UK pension transfers and the various QROPS affairs.

Other services include:

• Business Migrant Advice
• Business Development & Strategic Planning
• Corporate Finance Advice
• Audit & Assurance
• Tax Planning & Compliance
• Retirement & Estate Planning
• Due diligences, investigations & evaluations
• Financial Reporting

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 your superannuation 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 Qualifying Recognised Overseas Pension Scheme (QROPS). This is an Australian superannuation scheme that has obtained approval from HM Revenue & Customs. (We only deal with funds that have QROPS status).
• Australia imposes limits on the amount that can be transferred tax free to Australia. This is currently $150,000 per annum or a payment of $450,000 as a single sum but with no further contributions for a further 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.

  We are able to put arrangements in place to allow for transfers of amounts in excess of these limits from your UK pension fund to a UK holding fund from which the maximum allowable payments under Australian regulations can be made.

• If you transfer your funds to Australia after 6 months of tax residency, you are taxed on the growth from 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.

If you leave your pension in the UK

• When you reach retirement, any growth on the lump sum you receive is not, in most cases, tax free in Australia. The growth element from the date of your Australian tax residency will be taxed at your marginal rate 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. You will pay tax in the UK and in Australia on your annual pension, 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 pensions cease when the holder dies unless there is a spouse component. Even if this is the case, the majority of pension funds only pay half of the pension sum to the spouse.
• 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.

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.

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 entitlement.

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 many registered superannuation funds available to choose from. We are able to refer you to independent financial planners who can 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.uhyhnperth.com.au

Am I restricted on the amounts I can transfer to Australia?
The amount transferred in a single transaction must not exceed $450,000 or $150,000 if you are aged 65 or over on 1 July immediately prior to the date the transfer is received.

An annual cap of $150,000 applies for non-concessional contributions made by an individual into super. Members under the age of 65 can make non-concessional contributions totalling $450,000 in a financial year provided no further contributions are made in the following 2 financial years.

It should be noted, however, that the value that represents the growth component of the fund since 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?
How your transferred sum will be treated depends on your visa status. Funds returned to the UK can attract tax liabilities both in Australia and UK. You should seek advice before making a decision.

Alternatively you can leave your Superannuation in Australia. This does 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 for transferring my funds to Australia?
Our fees are fixed and are not based on the value of the fund. You can arrange with a financial advisor for the fees to be paid on your behalf from the superannuation fund. See our website www.uhyhnperth.com.au or email pensions@uhyhn.com.au for our current charges.

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.uhyhnperth.com.au.

Does it matter if I am on a temporary visa?
Yes, you will not be subject to tax on the growth of your pension fund. . If you decide to bring your pension to Australia, from a tax point of view you should do so before obtaining your permanent residency. However, there are significant implications should you decide to return to the UK having made the transfer. We recommend you seek advice before making the transfer.

If I decide to transfer my pension to Australia, what should I do next?
Please contact us for a free, no obligation consultation.