Ken

On 13/08/2023 at 19:25, Cheery Thistle said:

I have yet to see anything advertised for sale that remotely resembles anything ‘Uber cool’. Everything has a distinctly 70’s vibe haha! Do Aussies just not do up their homes? 

Not if they're planning to sell them. They leave it for the buyer to modernise to their taste. 

On 12/08/2023 at 20:44, Tulip1 said:

I wonder if it’s the same the other way around then.  Last time I was in Australia, my son said I could drive his car.  When I asked about insurance he said his rego covers anyone third party (or something like that) does that mean as I’d be using my UK license I wouldn’t be covered? 

On our insurance policy any driver (over a certain age - I forget how old that is but it makes the policy a lot cheaper) can drive, but there's an additional excess for not being a named driver and a further excess if they have a foreign driver's license or an Australian licence for less than a set number of years. All the policies I've seen over here have been similar. Because the compulsory third party portion is covered by rego it's probably easier for insurers to provide any driver cover here than in the UK.

Note that they need to be a named driver if they live at the same address, but obviously if they are visiting from overseas then they don't live at your address. Might catch out someone who is putting up a friend or relative who is a new migrant though!

8 hours ago, Daffyduck said:

I'd heard that you're exempt from the Medicare additional surcharge if you're still on the first 12 months of your PR visa. Not been able to find anything online about this, can anyone confirm?

As @paulhand has said, there is an exemption from the LHC loading, but you are still subject to the Medicare Levy Surcharge if you don't have hospital cover and your income is over the threshold.

If the visa was issued for a particular activity and not for a particular employer, then you are tied to that activity not to a particular employer. Consequently, you can work for any employer, provided (as per your post) that you:

• continue to undertake those activities
• not undertake any activities that are inconsistent with the purpose of the visa
• not be self-employed
• not undertake work for any person that is inconsistent with the purpose of the visa.

19 hours ago, Parley said:

It is important to understand however that Wise is not a bank, it is a Financial Technology Company.

If it were to fail while holding a large amount of your funds, my understanding is you will not be covered by any of the government schemes that protect your money in a normal bank.

If you live in Australia, it is an "Authorised Deposit-taking Institution (ADI) limited to providing Purchased Payment Facilities". The only other organisation with this same status is Paypal. Despite their ADI status neither Wise nor Paypal are covered by the Financial Claims Scheme.

19 hours ago, InnerVoice said:

Thanks @Ken, I will check this. If the only choice offered is to take the lump sum, are you still allowed to transfer your pension to a different UK provider before drawdown?

Sorry, I'm not up on the rules regarding transferring from one UK provider to another. Presumably it wouldn't be a taxable event as it's still locked up in a pension fund (same with consolidating your funds into one scheme) but I don't know for certain how the ATO looks at it.

16 hours ago, Marisawright said:

I think you're reading Ken's post wrong.  He's saying some providers will give you a choice of taking the lump sum OR a pension OR 25% + pension.

I think he's read your post as taking a lump sum each year, which isn't one of those options.  However I assumed you were taking it as a monthly pension totalling $18,200 per annum, which would be covered by one of those options. Is that what you meant?

6 hours ago, InnerVoice said:

Yes - that! 

If however you take it as a pension, you will receive that pension until you die, not "until exhausted". Unlike Super, pensions do not exhaust the fund, but instead the fund purchases an annuity which pays out for the rest of your life regardless of how long you live, whether you can afford an annuity that pays $18,200 will depend upon the size of your pension pot. Some pension funds will allow you to take as flexible lump sums (perhaps equivalent to say $18,200 each year) annually or monthly as it suits you, and that will be "until exhausted".

1 hour ago, InnerVoice said:

I'm sure you're aware that if you take your UK pension as an income stream and you're still working, then you'll be taxed on it in Australia at your marginal (highest) rate of tax. If you're planning to retire and you have a decent amount in your Aussie super, you could draw $18,200/annum from your UK pension until it's exhausted. As long you don't have any other income streams in the UK, you should be able to get that $18,200 tax-free because it's lower than the UK personal allowance (£12,570), hence no tax to pay in either the UK or Australia.

That's what I intend to do with my UK private pension, although I still intend to seek financial advice closer the time to ensure I've done my sums right!

Unfortunately, although the UK pension regulations allow it, not all UK pensions allow you to flexibly draw down like that. With some providers the only choices are taking the entire amount as a lump sum, or a pension or a 25% lump sum and a pension.

23 hours ago, Andrew from Vista Financial said:

Hi Ken

Where you say, "to minimise the amounts you can get tax free" do you mean if a person transferring wanted to declare AFE at their MTR (if they had no other income for example)?

 

I actually said "to maximise the amount you can get tax free", but otherwise yes. You don't need to declare the AFE of separate funds that you aren't transferring until a later year when you do so, and by then you'll have more tax free and low tax allowances and Concessional Super Caps available.

To answer a question you seem to have left hanging in the title of this thread "Consolidation" I would advise against Consolidating any pension funds in the UK if you plan to bring them over to Australia. You will save on some day-to-day fees in having the funds consolidated, but you will have a much bigger and more unwieldy amount. Separate funds will all be taxed separately when transferred and this will allow you to better time the transfer to minimise tax, in particular by transferring them in different years to maximise the amounts you can get tax free.

5 hours ago, Emily91 said:

Thank you for your help!  Just to make sure I understand, they will cancel the 189 visa or tourist visa or both? 

By chance, do you know the answer to "I applied in January and submitted health checks in April; therefore, I'm not sure if my processing time starts in January or April."

Thank you! 

Your processing time started in January. If they got to the point where they needed your health checks, they would have contacted you and paused processing until the health checks were received. The health checks used to be one of the last things before the visa is issued. Unless that has changed then (based on the fact that they haven't issued the visa yet) it seems highly unlikely that they had got to that point in your processing by April.

On 08/07/2023 at 23:14, Parley said:

You can only salary sacrifice up to $27,500 per year can't you which includes the employer contribution?

Or are you referring to making a non concessional contribution of $110000 from after tax income/money?

I was referring to the concessional cap as that is to my mind the only worth using. It depends upon how much your Super balance is and whether or not you used up your full annual contribution in previous years. If your Super balance is under $500K you can use up to 5 years of unused annual contributions. Consequently, while some people are limited to $27,500, others can put in six-figure sums (but not every year).

It occurs to me that perhaps the person spoken to at Virgin Money just didn't understand and thought that a transfer to Wise was an international transaction and not a simple transfer from one UK bank to another.

22 hours ago, Ken said:

I've already posted that in this thread. It varies depending on employer but for public hospitals it's $9,010.

On 07/07/2023 at 08:04, InnerVoice said:

Based on other comments this would appear to be a benefit unique to those working in the public health sector. It sounds like a great perk. I assume there's a limit, and you can't just sacrifice your whole salary down to $18,200 and live completely tax-free?!

It occurs to me that I should points that's the limit for living expenses and the like. There is no limit for salary sacrifice to Super other than annual and lifetime limits on Super. If you're coming up to retirement definitely worth piling as much as you can in to Super to pay 15% tax rather than your usual rate as you can take that 85% back as soon as you've retired. Not worth taking your salary right down to $18,200 though - you'll lose the low income offset and so be paying tax you didn't have to!

6 hours ago, InnerVoice said:

How much is it then?

I've already posted that in this thread. It varies depending on employer but for public hospitals it's $9,010.

14 hours ago, RubyMonday said:

Only 10 days sick leave per year!! That’s terrible. With the NHS it’s 6 months full pay then 6 months half pay. I’ve only been off sick for a week in the last 6 years so it’s not that I need it but it’s nice to know it’s there. Is there any plans to increase that or are people just ok with it?

Edit: So actually is it 10 days per year but if you don’t use them then they build? So I would have had 60 days minus the 4 shifts  so still left with 56 days?

The NHS has such large amounts of sick leave due to the large numbers of workplace injuries (e.g. people straining their backs trying to lift patients). In Australia workplace injuries are covered by what is normally referred to as "Workers Comp" which is a compulsory employer insurance scheme overseen by state governments and pays an income to those recovering from workplace injuries.

14 hours ago, RubyMonday said:

Makes a good change from having to pay out of my salary for pension and getting a lower amount if I want to salary sacrifice. So if I get $85,000 wage the 11% would be based on that even if I sacrifice $5000 of it to take my wage down to $80,000 for tax purposes?

Yes that's right. Just watch though that when they say $85,000 they mean $85,000 plus Super and not $85,000 including Super as some unscrupulous employers are known to do in their adverts.

2 hours ago, RubyMonday said:

Sounds good, I don't actually have any salary sacrifices at my job at the moment but had considered getting a lease car through my healthcare trust. The problem is it lowers your pay by the amount sacrificed and so lowers your pension. Is that the case here so you'd have less money going to super? 

A few years ago (I can't remember which year) they changed the rules so that employers have to pay Super on your full salary including any amounts you sacrifice. Before that employers could (and often did) only pay Super on the amount left after salary sacrifice.

9 hours ago, Marisawright said:

Wow that sounds crazy.  I know you can salary sacrifice for a mortgage, but the employer pays the money directly to the lender.   If the money gets sacrificed and then gets paid to the employee, then the employee could go and spend it on anything, surely?  I'm curious if @Ken has heard of this.

Yes, the employer pays to a third party salary sacrifice company (such as RemServ). The salary sacrifice company then distributes the amount and in some cases (in theory they should have evidence that the employee has spent the money on allowable expenses) this involves them transferring it to the employee tax free. For most people there is only a very narrow range of things you can salary sacrifice for, but if you work in the Healthcare or Charity sector (and your employer allows it) there's a very wide range you can salary sacrifice for including ordinary living expenses so it's almost impossible for the employee not to have spent the maximum (which varies by industry but is $9,010 for public hospitals) on allowable expenses.

On 29/06/2023 at 21:53, desreb said:

Interestingly, i just checked my year-by-year top up statement on the gov.uk website just now, and it still says all previous years to top up going back to 2011, must be done so by 31st July

 

I'm assuming there will be an inflationary price increase on 1st August but you'll still be able to contribute, whereas in the past (and per the original post here after April 2025) you were restricted to going back 6 years.

17 minutes ago, Kat G said:

Hi there, just a quick one. Is the weather in Melbourne really that bad? I’ve seen a lot of negative comments about it on here (although lots of old threads) but on paper it looks at worst pretty mild to me! I’m from the UK - so surely it’s got to be an improvement!

On average Melbourne's weather is better than the UK. The problem is that it doesn't stay average (or anything else) for long. In the summer it can be 40 degrees and then drop to 20 in the course of an afternoon. Winters are never what I would call wintry. I've heard stories about giant hail showers but in 9 years in Melbourne I didn't see anything worse than light hail and that very rarely. It does however get very autumnal for 6 months of the year. It's frequently windy (more so than in the UK in my experience) even during the summer months.

14 minutes ago, InnerVoice said:

Thanks @Andrew from Vista Financial. I looked into the possibility of transferring it about 5 years ago and I was informed at the time that it probably wasn't going to be worth it unless I had around a quarter of a million. My pot is considerably less than that, but I'm happy to get a second opinion at some point though. I was under the impression that there are also fees to be paid to HMRC in the event of a transfer because they have given me a 20% tax credit on all my personal contributions.

If the amount of AFE is relatively small, then there is also the option of transferring it to Australia and paying it in to your own super fund yourself as a voluntary contribution which you are claiming as a tax deduction and then only paying 15% tax on it rather than the full whack. There's a host of things you need to comply with and the amount you can contribute in this way is severely limited, but if your total fund isn't already too large (and you didn't pay in the maximum in previous years already), you can use underpayments from previous years too.

3 hours ago, InnerVoice said:

Thank you! @Ken That's a super-useful post for me, and hopefully for the OP and others too.

I've been wondering about how I could take the '25% tax-free lump sum' from my UK pension without paying too much (or ideally, no) tax. Based on what you've stated above, I assume that HMRC would not tax that first 25% at all because it's considered totally tax-free based on UK laws. I assume I would need to declare that amount in Australia, but would the ATO treat it as taxable income or a capital gain? Would I be correct in thinking that if I was residing in a country where tax on overseas income is exempt, then I'd pay nothing at all in either the UK or the other country (assuming a DTA existed between the two)?

Yes, if you are a permanent resident or citizen the ATO would treat it as taxable income. The value of your pension fund at the date you moved to Australia (or became a permanent resident if later) is not taxable income, but (depending on how you take your pension) the tax-free portion is the last part of your pension that you draw down, so if you're taking lump sums that first 25% would likely be entirely taxable while later lump sums could be partly or wholly tax free. If, however, you commence a pension, and the only lump sum is the 25%, it's a matter of valuing the worth of the lump sum when you moved to Australia separately from the pension. In that case you would get some of it tax-free, as only the growth is taxed.

The pension portion wouldn't necessarily be fully taxed either since you are entitled to get the purchased value of the pension (the amount you paid in) tax-free. Unfortunately, unlike with the lump-sum, the tax-free portion is only the amount you personally paid into your pension and all of the growth before you moved to Australia, plus any amounts paid in by your employer would still be taxable. Furthermore, claiming this UPP isn't particularly easy as you have to prove what you paid into you pension decades ago and get the ATO to approve it, and then it's often a tiny amount compared to the growth of your pension so many taxpayers don't bother. Some taxpayers mistakenly believe they can automatically claim an 8% UPP. That however is the rate that the ATO has granted for UK state old-age pension. For a personal pension you have to get the rate agreed with the ATO.

As to your other question, if you were residing in a country where tax on overseas income is exempt (and this includes Australia if you are a temporary resident) then you would pay no tax at all on the 25% as that is tax-free in the UK. That would apply whether or not a DTA existed between the two countries. If there was a DTA it's theoretically possible that the other 75% would be tax free in both countries (if taken as a pension and not as lump sums) - but I don't see that working for temporary residents in Australia nor do I think a DTA would be agreed that passed taxing rights on pensions to a country where they would be tax free.

On 22/06/2023 at 18:15, ToowoombaBlue said:

Has anyone else had this issue?

I have a private UK pension on which I pay tax on the occasional lump sums I take at  HMRC standard rates. This is despite them being aware that I am an Australian citizen residing permanently in Australia. I completed a form declaring Australian residency back in 2015.

Now in accordance with Australian tax laws, I also declare these lump sums and my tax is adjusted accordingly here.

I’m in the process of claiming the UK tax back, but it is proper inconvenient!

How can I get them to play ball?

HMRC have recently changed their approach and ruled that lump sums are not pensions under the terms of the double taxation agreement. That's important because pensions are only taxed in the country you are resident in per the double taxation agreement, whereas other income is taxed first in the country they are sourced (in this case the UK) with that tax paid being an offset in the country where you are resident (in this case Australia). You still only have to pay one set of tax, but instead of it all being paid in Australia it's paid in the UK plus a top-up (assuming the Australian tax rate is higher - which it generally will be in you live in Australia as you'll have more income there) in Australia.

It's different if you are actually receiving a private UK pension and not lump sums. In that case as @rammygirl has said you complete the forms, send them to the ATO to verify them, who send them to HMRC, who (provided they agree that it's a pension) will eventually inform the pension company not to deduct tax at source.

On 23/06/2023 at 11:49, LA7000 said:

So I am thinking of flying back to the UK to complete my bike licence as it takes over 2 years to get a full licence in Victoria , I am going to complete a direct access course which will provide a full unrestricted bike license within a week. My question is, I have already converted my UK driving licence to an Australian one will it be an issue getting the unrestricted bike licence added to my current Australian licence?

If VicRoads have already converted your UK licence into a Victorian licence, I don't see them accepting a new UK licence to convert - especially if the date for passing the test is after the date that they have for you becoming resident in Victoria. So, yes, I'd expect it to be an issue. I could be wrong though since the bureaucratic mind does not always work the way you would expect.