Superannuation in Australia

30 March 2015
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Overview of Superannuation

Superannuation (or "super" for short) is the process of accumulating a fund for retirement. Although the Australian government does provide an Age Pension, most people expect a higher income in retirement. The Government has introduced tax incentives and employment laws to encourage contributions to super.

Superannuation is a complex issue and we can only cover the basics on this site. However, we have listed some key points that migrants may want to consider and provided links to other sites you can visit for more detail.

 

Important - Please Read
In Australia, anyone providing financial product advice must be licensed through ASIC (www.asic.gov.au). Aussiemove.com is not a financial advisor and we do not give financial product advice - we do provide general factual information only, obtained from official government sources, such as the ATO (www.ato.gov.au) and statistics from what we believe to be reputable sources. You should consider obtaining independent advice before making any financial decisions.

Our advertisers/sponsors may be Australian or overseas companies that provide services to migrants either before they depart their home country or when they are resident in Australia - the licensing they require will depend on where they are located and where their clients are resident. If you would like to find out about their services, please use the links to contact them directly in order to discuss your own requirements with them.

The Age Pension

How much is it?

The full state Age Pension is $776.70 per fortnight for a single person or $585.50 each for a couple. But there is an asset test and an income test which may reduce the actual pension payment.

More Information

For more information on the Age Pension, visit the Centrelink website.

Superannuation Basics

The Superannuation Guarantee

By law, employers must pay into a superannuation fund for their employees (there are some exceptions, eg. if salary is very low).

The minimum guarantee rate is 9.5%, but some employers may guarantee a higher rate - possibly up to 15%.

When considering a job offer, check if the Super Guarantee is on top of the figure you're being offered, or included in it - it makes a big difference!

Self-employed people can also pay into a Super fund and gain the tax benefits.

Funds can be run by the employer (private company or state industry), run by a private fund manager or self-managed by the individual.

Tax Incentives

Contributions to complying superannuation funds are taxed at 15%, which represents a considerable saving for someone on higher tax rates (37% or 45%). Earnings within the fund are also taxed at 15%.

Additional Contributions

There are various ways to top up your Super fund, such as Salary Sacrifice (before tax), additional contributions (after tax), co-contributions. What you can do, how much you can contribute and how tax-effective it is will depend on your employment status and salary.

Access to Benefits

The "Preserved Benefits" of your fund can only be accessed when you reach the "preservation age" - between 55 and 60, depending on when you were born.

Choice of Fund

Legislation introduced in July 2005 enables most employees to choose which fund their Super Guarantee is paid into - see ATO for more.

More Information

For more information on the above points, visit the Superannuation Entry Point on the ATO website, see our links page or contact a financial advisor.

Superannuation Advisors

UHY Haines Norton is an association of independent Chartered Accountant firms in Australia and New Zealand and a member of UHY International Limited, an international network of independent accounting and consulting firms.

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

Our 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

PENSIONS
Transferring UK Pension funds to the Australian Superannuation system is a specialist service area. We occupy a unique position in the market by providing a service that meets all the compliance requirements both in UK and Australia and where you, the client, receive all the necessary advice from experts to help you make, what is, an important decision. The service also locates UK pension funds as well as obtaining transfer valuations. Fees are fixed and transparent so there are no hidden surprises.

For further professional advice, please contact us at:
+61 8 9444 3400 | perth@uhyhn.com.au | www.uhyhnperth.com
16 Lakeside Corporate, 24 Parkland Road, Osborne Park, Perth. WA 6017

UK Pension Transfer > Overview

Provided by UHY Haines Norton
Chartered Accountants

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 $180,000 per annum or a payment of $540,000 as a single sum but with no further contributions for a further 2 years.

    For further details of our pension transfer services, please click here.

  • 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.

For further professional advice, please contact us at:
+61 8 9444 3400 | perth@uhyhn.com.au | www.uhyhnperth.com
16 Lakeside Corporate, 24 Parkland Road, Osborne Park, Perth. WA 6017

UK Pension Transfer > FAQs

Provided by UHY Haines Norton
Chartered Accountants
Can I transfer my UK pension to Australia?
The majority of the pension funds in the UK are capable of being transferred to Australia.

Can I transfer my British State Pension to Australia?
Unfortunately not! We suggest you contact HMRC to establish whether or not to 'top up' your fund.

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

Am I restricted on the amounts I can transfer to Australia?
The amount transferred in a single transaction must not exceed $540,000 or $180,000 if you are aged 65 or over on 1 July immediately prior to the date the transfer is received.

An annual cap of $180,000 applies for non-concessional contributions made by an individual into super. Members under the age of 65 can make non-concessional contributions totalling $540,000 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%.

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.

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.

For further professional advice, please contact us at:
+61 8 9444 3400 | perth@uhyhn.com.au | www.uhyhnperth.com
16 Lakeside Corporate, 24 Parkland Road, Osborne Park, Perth. WA 6017

Superannuation Links

Superannuation Entry Point on the ATO (Australian Taxation Office) website.

www.moneysmart.gov.au - a consumer guide published by ASIC - Australian Securities and Investments Commission (the consumer protection regulator for Australian financial services).

National Information Centre on Retirement Investments.

QROPS

www.hmrc.gov.uk/PENSIONSCHEMES/qrops-list.htm
List of QROPS (Qualifying Recognised Overseas Pension Schemes) published by HM Revenue & Customs in UK.

Disclaimer

Information on this website is intended to give the reader an overview of many aspects of life in Australia, such as healthcare, real estate, tax, superannuation etc.

While we at Aussiemove.com have performed a large amount of research on each subject area, we do not claim to be experts in those fields and we recommend that migrants discuss their requirements with companies specialising in those fields before making purchases, investments or other decisions concerning their move.

The content of this website is general in nature - no specific advice is intended.

We provide links to other companies as a service to our readers. We have taken reasonable care to ensure that each linked website does not contain offensive or inappropriate material. However, we are not responsible for the accuracy of any of the material in any linked website, or the advice that may be contained therein.