Leaving Super in Australia

[Time2Go]

Hi

 

We are leaving in August 2015, and I have accumulated a decent amount in a super fund. As I cannot access the monies, I am looking for a very low fee fund where I can park the money until preservation age. My current fund is ok, but the returns are poor. It has only grown by my contributions this year.

 

It is a shame we cannot take it with us, I would have thought the Australian Government would have enjoyed a decent cash injection from the thousands in tax that is withheld in some cases, being applied to all people who leave and never want to return. That's another discussion altogether.

 

Any advice is greatly appreciated.

 

Thanks

[Andrew from Vista Financial]

Hi

 

We are leaving in August 2015, and I have accumulated a decent amount in a super fund. As I cannot access the monies, I am looking for a very low fee fund where I can park the money until preservation age. My current fund is ok, but the returns are poor. It has only grown by my contributions this year.

 

It is a shame we cannot take it with us, I would have thought the Australian Government would have enjoyed a decent cash injection from the thousands in tax that is withheld in some cases, being applied to all people who leave and never want to return. That's another discussion altogether.

 

Any advice is greatly appreciated.

 

Thanks

 

Hi

 

I take it you are you leaving as PR's/Citizens and not Temp Residents?

 

With regards to Super Funds have a look here:https://www.chantwest.com.au/cwInvPerfSuperGrowth.aspx?MenuItemID=708 it gives quite good data on returns and also rates funds, it may assist.

 

Regards

 

Andy

[Time2Go]

Thanks Andy

 

We are not citizens or do we have actual PR. But as Kiwis we are in a dilemma. We have dual nationality both Kiwi and British but have spent most of our lives in the UK. I have spoken to my fund and they were very helpful. It would appear that I can reduce the fees etc and still continue paying into the fund while we are back in the UK. This is only possible through Bpay. I am unsure as to the tax implications and looking forward to when I can access my super, as I will be a non resident at that time.

 

Thanks

[Marisawright]

We are not citizens or do we have actual PR. But as Kiwis we are in a dilemma. We have dual nationality both Kiwi and British but have spent most of our lives in the UK. I have spoken to my fund and they were very helpful. It would appear that I can reduce the fees etc and still continue paying into the fund while we are back in the UK. This is only possible through Bpay. I am unsure as to the tax implications and looking forward to when I can access my super, as I will be a non resident at that time.

 

I believe Kiwis are in the same boat as PR's and Aussie citizens, you can't withdraw the money early.

 

The very first thing to do is cancel ALL insurances on the fund because once you leave Australia, the insurance doesn't cover you anyway. Put the cancellation in writing.

 

As for which fund - sticking with your existing fund and reducing fees isn't the right approach, if they're rubbish then they're rubbish! Better to move to another fund - it's very easy, contact the new fund will organise everything for you.

http://www.superguide.com.au/how-super-works/comparing-super-funds-check-out-the-cheapest-funds

Edited July 3, 2015 by Marisawright

[Time2Go]

Hi

 

Yes Kiwis are treated the same as citizens and PR holders, although we cannot access a multitude of things here as the visa is classed as temporary?? In any case I will be cancelling the insurances as a first step once we leave in August. as for a new fund I will start looking now. I am off work now due to a work accident, and no Super will be paid by Work Cover.

Thanks for the advice thus far. Another question is how much tax will I have to pay when I am able to access the Super at 60 years of age. I will be classed as non resident I suspect.

 

Thanks

[newjez]

Hi

 

Yes Kiwis are treated the same as citizens and PR holders, although we cannot access a multitude of things here as the visa is classed as temporary?? In any case I will be cancelling the insurances as a first step once we leave in August. as for a new fund I will start looking now. I am off work now due to a work accident, and no Super will be paid by Work Cover.

Thanks for the advice thus far. Another question is how much tax will I have to pay when I am able to access the Super at 60 years of age. I will be classed as non resident I suspect.

 

Thanks

 

Does you're fund not have different investment options?

 

It has been a bad year. I haven't made much headway either. Probably get a whole lot worse on Monday, depending on Greece.

[Marisawright]

Thanks for the advice thus far. Another question is how much tax will I have to pay when I am able to access the Super at 60 years of age. I will be classed as non resident I suspect.

 

 

If you are not living in Australia, then you will be classed as non resident - but so would anyone not living in Australia! I'm a Aussie citizen and if I move permanently to another country, I'll be classed as non-resident too.

 

However I'm not sure what you mean about taxing your super when you access it. Who do you expect to tax your super and how much? I understood that I'd still be able to draw my super tax free, resident or non-resident. I'd love to know if that's wrong!!

 

It's the British government I'd have to worry about. If I take my super as a lump sum and bring it over to the UK, it might be taxed as a foreign currency investment and I could lose a hefty chunk to the British tax man. Alternatively if I take it as a pension, I'll have to declare that pension on my UK tax return as income.

Edited July 4, 2015 by Marisawright

[The Fisheys]

I hate to be controversial, but isn't the whole point about superannuation that it is favourably taxed because it is supposed to support you / the Australian Taxpayers in your dotage. It is not meant to be a tax fiddle.

If you don't want to become citizens here then don't. But please don't expect Australian Taxpayers to fund you, because we would rather fund our schools, our hospitals, and our pensioners.

[Marisawright]

I hate to be controversial, but isn't the whole point about superannuation that it is favourably taxed because it is supposed to support you / the Australian Taxpayers in your dotage. It is not meant to be a tax fiddle.

If you don't want to become citizens here then don't. But please don't expect Australian Taxpayers to fund you, because we would rather fund our schools, our hospitals, and our pensioners.

 

Citizenship or not is irrelevant to this discussion, actually. Being a citizen makes no difference to your tax treatment - it's where you're resident that matters.

Edited July 4, 2015 by Marisawright

[Time2Go]

Hi

 

I was only asking if as a non resident would I be taxed on my super when I accessed it. As has been said citizenship is irrelevant to the discussion, I was looking at information for non residents when super is accessible. And yes all pensions have to be declared in the country you reside, as does all income derived from overseas.

In response to The Fisheys, I have worked and paid my taxes since the day I arrived here, and I expect nothing in return from those payments, never have and I never will. You can have them with pleasure.

 

Thanks

[The Fisheys]

Citizenship or not is irrelevant to this discussion, actually. Being a citizen makes no difference to your tax treatment - it's where you're resident that matters.

 

If you are a temporary resident your super is taxed if you draw it, but not if you have PR, or are a citizen.......once you are old enough. Sorry if my point wasn't clear.

[Chortlepuss]

If you are not living in Australia, then you will be classed as non resident - but so would anyone not living in Australia! I'm a Aussie citizen and if I move permanently to another country, I'll be classed as non-resident too.

 

However I'm not sure what you mean about taxing your super when you access it. Who do you expect to tax your super and how much? I understood that I'd still be able to draw my super tax free, resident or non-resident. I'd love to know if that's wrong!!

 

It's the British government I'd have to worry about. If I take my super as a lump sum and bring it over to the UK, it might be taxed as a foreign currency investment and I could lose a hefty chunk to the British tax man. Alternatively if I take it as a pension, I'll have to declare that pension on my UK tax return as income.

 

 

Seriously? If we come back to Oz before cashing in our super tax free then take it back to the UK, the UK govt could tax it? We were hoping to collect it in Oz tax free and take it home to invest....

[Marisawright]

Seriously? If we come back to Oz before cashing in our super tax free then take it back to the UK, the UK govt could tax it? We were hoping to collect it in Oz tax free and take it home to invest....

 

Yes, if you cash it in BEFORE you leave Australia and put it in the bank, then it's just money and you can transfer it no problems. In the OP's case, they're leaving before they're allowed to cash it in. So they'll either have to take the lump sum or a pension after they've been in the UK for several years, and that's a whole different ballgame.

[Marisawright]

If you are a temporary resident your super is taxed if you draw it, but not if you have PR, or are a citizen.......once you are old enough. Sorry if my point wasn't clear.

 

That's only true for people living in Australia. Even if you're a citizen or have PR, if you're not living in Australia when you draw it, you get taxed on it.

Edited July 5, 2015 by Marisawright

[NickyNook]

That's only true for people living in Australia. Even if you're a citizen or have PR, if you're not living in Australia when you draw it, you get taxed on it.

 

Really?

 

I don't believe that lump sum and income streams from superannuation are taxed by the ATO (as long as the claimant is over 60) - regardless of where you are living when you draw it.

 

That's not to say that your country of residence won't tax it, of course - but that's different.

 

I'd be very interested to see a link that shows the ATO will tax super withdrawals for over-60 non-residents? Do you have one?

[Marisawright]

There are two conversations going on here so it does get confusing, doesn't it!

 

Pension - no, it's not taxed by the ATO but it will be taxed as income by the UK government at normal tax rates - whereas if you get an income stream while resident in Australia, you get a tax offset. So you'll be paying more tax on your super if you're receiving it in the UK instead of in Oz.

 

Lump sum - I was told this by a financial adviser in a conversation, and it's come up in a couple of threads here too. It was a shock to me, as well! In fact before writing it here, I did Google to find a couple of sources to be sure I hadn't dreamed it

 

The relevant paragraph is "However, if the Australian superannuation benefits were to be taken in the form of lump sum payment, the benefits withdrawn would be taxable in Australia, in accordance with the marginal tax rate applicable to non-residents, subject to the maximum rate of 15% for non-excessive benefits."

 

 

Edited July 5, 2015 by Marisawright

[NickyNook]

 

Lump sum - I was told this by a financial adviser in a conversation, and it's come up in a couple of threads here too. It was a shock to me, as well! In fact before writing it here, I did Google to find a couple of sources to be sure I hadn't dreamed it - here's one, I did find others:

http://www.ceoforum.com.au/article-detail.cfm?cid=6064&t=/Maria-Siu-Berkley-Group/Changing-Countries-of-Residence-Superannuation-Issues-for-CEOs

 

The relevant paragraph is "However, if the Australian superannuation benefits were to be taken in the form of lump sum payment, the benefits withdrawn would be taxable in Australia, in accordance with the marginal tax rate applicable to non-residents, subject to the maximum rate of 15% for non-excessive benefits."

 

 

 

Hmm. I'm still not convinced.

 

The ATO's own instructions to Super funds regarding taxation of Lump Sums makes no mention whatever of a non-resident withholding tax. It actually requires non-residents to be taxed less than residents in some circumstances (i.e. where part of the lump sum has a taxable component).

 

https://www.ato.gov.au/printfriendly.aspx?url=/Rates/Schedule-12---Tax-table-for-super-lump-sums/

 

When I can see an ATO reference, I'll believe it.. :wink:

[Guest The Pom Queen]

Can I just remind people that this is @andrew from vista financial forum for members to liaise directly with him. If you have general advice, info or a question please use the money and finance section.

[Marisawright]

Hmm. I'm still not convinced.

 

I'd love to be proved wrong as it's one of the reasons we've decided we will be forced to return to Australia when we need to start drawing on our super.

[Andrew from Vista Financial]

I'd love to be proved wrong as it's one of the reasons we've decided we will be forced to return to Australia when we need to start drawing on our super.

 

 

Can you confirm the exact situation you will be in when looking to withdraw super from your Australian Fund ie what age would you look to withdraw, how you would withdraw lump sum, income etc?

[Marisawright]

Can you confirm the exact situation you will be in when looking to withdraw super from your Australian Fund ie what age would you look to withdraw, how you would withdraw lump sum, income etc?

 

We would be open to taking either a pension or a lump sum, depending which was financially most beneficial. I understand the pension would be taxable as normal income by the UK government. I understood the lump sum would be more complex as it could be seen as a foreign currency investment?

[Andrew from Vista Financial]

Hi

 

Yes I think that there may be confusion here with regards to which country the question is being asked of.

 

 

Australian Tax

 

I agree with NickyNook generally superannuation benefits (tax-free component and taxable component – taxed element) received by a person (resident or non-resident) who is aged 60 or older, are treated as non-assessable non-exempt income from an Australian tax perspective.

 

If there is a taxable component – untaxed element (generally derived from untaxed super funds (ie local government)), it is still subject to Australian tax.

 

I am not overly familiar with the situation with non residents however after speaking with our Super techie team my understanding where a benefit is withdrawn by a former resident and they are between their preservation aged and 60 is, the taxable component of their lump sum benefit is taxable in Australia.

 

However, they are entitled to the low rate threshold (https://www.ato.gov.au/Rates/Key-superannuation-rates-and-thresholds/?page=7) of $195,000 (below which the benefit is tax free) and, where tax is payable a tax offset is available to reduce the effective rate of tax to a maximum of 15%.

 

Of course the above is relevant to Australian tax and does not take into account any tax that may be payable in the foreign jurisdiction.

 

Is this consistent with your understanding?

 

Given the rate at which superannuation legislation changes occur it would obviously be prudent to take advice as you are gradually approaching the age at which you wish to access funds.

Edited July 7, 2015 by Andrew from Vista Financial

[Marisawright]

That's what I understood but we are already over 60 so that part is not a concern. My concern, as you say, is with what the "foreign jurisdiction" would do and my understanding is that the UK tax could make quite a dent in our lump sum if we chose to take it.

[Andrew from Vista Financial]

I would be inclined to talk with @Alan Collett (http://www.pomsinoz.com/forum/members/8471.html) on this, he would be able to advise on the implications.