YOU CAN NOW TRANSFER YOUR SUPER BETWEEN AUS AND NZ
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Articles by John Heaslip
Australians and New Zealanders are now able to transfer their retirement savings between compatible funds in the two countries.
New legislation was enacted on 1 July 2013 and is called the Trans-Tasman Portability Scheme. This scheme allows Australians and New Zealanders to transfer their retirement savings between Australian Prudential Regulation Authority (APRA)-regulated Australian superannuation funds and New Zealand KiwiSaver schemes.Transfer from New Zealand to Australia
A KiwiSaver account holder is now able to transfer their KiwiSaver funds directly into an Australian superannuation fund when they move to Australia. The amount transferred from the KiwiSaver account:
• Can only be held in a complying superannuation fund regulated by APRA
• Must be separately identifiable within the account established in the Australian superannuation fund
• Is not allowed to be transferred to, or subsequently held in, an Australian Self Managed Superannuation Fund (SMSF)
• Can generally be accessed from the Australian fund when the member reaches the retirement age as defined in the New Zealand Superannuation and Retirement Income Act 2001 (currently 65)
• Is unable to be used to purchase a first home (unlike in New Zealand)
• On the individual’s return to New Zealand, can be transferred back to a KiwiSaver account.
Australian tax implications
Unlike similar transfers from other countries such as the UK, the transfer of a KiwiSaver account will not be viewed as a foreign superannuation lump sum payment, so there will be no Australian tax liability on the transferred amount. This means the amounts transferred from a KiwiSaver scheme to an Australian superannuation fund will be treated as a contribution made by the member. Further, the transferred amount will, on initial entry into the Australian superannuation system, be:
• Assessed under the non-concessional contributions cap rules, and
• Added to the tax-free component of the member’s Australian superannuation fund.
New Zealand tax implications
From a New Zealand perspective, the transfer will receive an exemption from measures that would otherwise seek to recover tax credits (i.e. New Zealand Government Member Tax Credit and $1,000 kick-start payment) from a KiwiSaver account upon access as a result of permanent departure.
Transfer from Australia to New Zealand
From 1 July 2013, super fund members living in Australia who move to New Zealand may transfer their retirement savings from a participating Australian super fund to a New Zealand KiwiSaver scheme.
However, the Australian superannuation funds:
• Can only be transferred to a KiwiSaver account
• Cannot be accessed from the KiwiSaver account to purchase a first home
• May be accessed when the person reaches age 60 and satisfies the Australian definition of retirement
• Cannot be transferred to any other country other than back to Australia.
Tax impacts
Amounts transferred from an Australian superannuation fund to a KiwiSaver scheme are to be treated in a similar manner to a rollover between Australian funds. This means that the transfer will not be subject to tax in Australia as the money leaves the Australian superannuation fund.
From a New Zealand perspective, the transfer will receive a tax exemption at the point of entry into a KiwiSaver account – ensuring that such transfers will not be treated as dividends for taxation purposes. They will also be tax-free when withdrawn from your KiwiSaver scheme once you are legally allowed to access them.
Conclusion
The Trans-Tasman Portability Scheme will offer people permanently migrating to Australia or New Zealand further flexibility in dealing with their retirement savings. However, a decision to transfer retirement savings from one country to the other will require case-by-case analysis. Talk to us at GRA if you have questions about the tax implications of transferring super funds between Australia and NZ.
John Heaslip
Business Advisory Director
© Gilligan Rowe & Associates LP
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Disclaimer: This article is intended to provide only a summary of the issues associated with the topics covered. It does not purport to be comprehensive nor to provide specific advice. No person should act in reliance on any statement contained within this article without first obtaining specific professional advice. If you require any further information or advice on any matter covered within this article, please contact the author.
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