Lump sump tax free pension

[Paul scouller]

I have been in Australia for 10yrs i am 56 yrs old  and have the opportunity to withdraw 25% tax free lump sum from my uk pension what are the tax implications 

[Marisawright]

14 minutes ago, Paul scouller said:

I have been in Australia for 10yrs i am 56 yrs old  and have the opportunity to withdraw 25% tax free lump sum from my uk pension what are the tax implications 

You will have to declare it as income on your Australian tax return.   I suggest getting professional advice, but the likelihood is that you'll lose a big chunk of it to the Australian tax man.   You may lose less in tax if you take it as an ongoing pension rather than a lump sum.

Edited March 19, 2020 by Marisawright

[rammygirl]

The tax should be applicable only on the growth of the pension since you became an Aus resident. There are tax implications in Aus and also ways to legitimately reduce these.  You need an accountant who understands the implications otherwise you will pay too much tax. 

[Andrew from Vista Financial]

Hello Paul

The tax implications in Australia as rammygirl points out above will broadly be based on the growth since you arrived however there is a difference to this in terms of how the growth is considered and how much of the lump sum is assessable depending on whether your scheme is defined contribution (market linked) or defined benefit (salary linked).

Your other option perhaps is to consider a transfer to an Australian (QROPS) Super Fund (tax is still payable on the growth but may be able to be mitigated) and then draw from age 60 tax free (obviously not going to work if you need the money now).

Hope this helps.

Andy

 

Edited March 20, 2020 by Andrew from Vista Financial