Asking again ;-)

[Thom]

Someone advised in my thread on the "Money Transfer" forum, that this would be better asked in here, so here goes;

 

 

[h=2]When does the tax hit?[/h]

[hypothetical]

Me and the wife retire.

We move back to Blighty.

We have two lots of super paid into our Australian bank accounts.

As and when needed we transfer money from our Aussie accounts to our UK bank accounts.

When is this money taxed?

[/hypothetical]

 

[Andrew from Vista Financial]

Hi Thom

 

I think that your question may have been answered: http://www.pomsinoz.com/forum/money-transfer-ask-moneycorp/212602-when-does-tax-hit.html

 

However some comments from me, if you are over the age of 60 and withdraw monies from Superannuation/Pension from an Australian point of view generally (so long as this money is not coming from an untaxed fund) the funds are tax free.

 

So depending upon age and retirement status options may be to draw the monies as and when required from Superannuation as ad-hoc payments or to set up an income stream from an Account Based Pension (ABP).

 

The (ABP) income stream would be preferable as Superannuation monies are taxed internally at 10%-15% whereas earnings within an Account Based Pension are taxed at 0%.

 

If this option is chosen the income should be declared in the UK and taxed accordingly (not too sure of the foreign pension income tax rules for UK side so check with UK Tax Adviser).

 

Alternatively and an option I think that has already been posted by winter1, if possible depending upon age and retirement status it may be appropriate to withdraw 100% of funds from Superannuation whilst in Australia as if over the age of 60 (assuming coming from a taxed fund) the proceeds are tax free, these can then be taken to the UK and invested accordingly over there.

 

The above comments are of general information only as I am not fully aware of your situation and am also assuming that there is no transferred UK pension funds (QROPS) mixed in with the Australian superannuation funds or if so you have not been a UK tax resident within the last five full UK tax years.

 

 

Kind regards

 

Andy

[Thom]

Andy, many thanks, I'm indebted to you.

[Melbpom]

Andrew, What if I return to the UK before being able to access my super? When I get to 57 can I withdraw my full super and transfer as capital as suggested by Winter1 or do I have to be an Australian resident?

[Marisawright]

Andrew, What if I return to the UK before being able to access my super? When I get to 57 can I withdraw my full super and transfer as capital as suggested by Winter1 or do I have to be an Australian resident?

 

You can withdraw it but why would you? If you take the capital over to the UK and put it in a bank account, the interest will be taxable, whereas sitting in your Aussie super fund it isn't. We're going to leave our Australian super where it is until we really need the cash, enforced saving if you like.

 

(note that only applies if you don't have your own Self-managed Superannuation Fund, which gets taxed if you become non-resident so you'll have to get rid of it pronto)

[Melbpom]

Hi Marisa thanks for your reply. I agree it makes sense to leave super where it is until needed and will avoid the need to navigate the UK system (at least initially) when there's tons of other things to do.

A question on Australian pensions, what relevance does the Oz pension have to anyone returning to the UK? My understanding is that since it's administered by centrelink it's effectively income support similar to say newstart. Basically leave the country and you loose it (unless there's a reciprocal agreement). Have I missed something?

[Marisawright]

A question on Australian pensions, what relevance does the Oz pension have to anyone returning to the UK? My understanding is that since it's administered by centrelink it's effectively income support similar to say newstart. Basically leave the country and you loose it (unless there's a reciprocal agreement). Have I missed something?

 

You're half right! If you stay in Australia until you reach pension age, you can walk in, claim the pension, then leave the country and you won't lose it (though the amount may be reduced, depending on how long you lived in Oz).

 

However if you leave the country before you reach pension age, you won't be able to claim it in the UK. You must be physically in the country to make the claim. And you can't just fly over, claim and go back to the UK - you must have two years' residence around the day you claim (either before or after or during).

 

The silly thing is that if you retire to Italy or Spain or Malta or Greece, you can claim the Aussie pension from there no problem. The difficulty with the UK is that they have no social security agreement with Australia - mad isn't it?

 

One thing to consider with the Aussie pension - it's means-tested, and the means-testing includes your superannuation balance, so you may find you won't be eligible for it for several years anyway. I was quite shocked at how low our savings would have to go to get it:

 

http://yourpension.com.au/APCalc/index.html

 

Plus, of course, if you go overseas you must have 35 years' "working life" in Australia (which doesn't mean you worked for 35 years, it just means you were of working age). If you have less than that, you'll get pro rata.

 

So, bearing all that in mind, I decided I'd be better off claiming the UK pension - which isn't as good as the Aussie pension but I'll get it from the day I'm eligible. So I'm making some extra NI contributions to boost that up, and then once I'm in the UK I can claim my Australian work record before 2001 to top it up even more.

Edited July 14, 2014 by Marisawright