Accessing Australian Superannuation

[Angela63]

Hi, 

looking for advice….. Both myself and my husband  lived and worked in Aus for 10.5 years as UK expats, and accumulated between us a good amount of Superannuation in that time. We are both also Aussie Citizens.  We left Aus and returned to the UK 3 years ago for family reasons.  We are both 59 this year. I am currently working full time in the UK…. My husband has now retired on a full UK pension.  

I have a few questions 

1. If we came back to Australia and re- registered for tax purposes….would we be able to access our superannuation tax free?

2. Would we have to live in Aus for a certain amount of time to access?

3. how much tax would we have to pay if we didn’t come back to Aus , and simply accessed it from the UK? 
 

Any advice/ information would be gratefully received.

Cheers

Angela

 

 

[Parley]

Your preservation age is 60. To access your super tax free you will need to be over 60 and then declare yourself retired.

[Marisawright]

8 hours ago, Angela63 said:

1. If we came back to Australia and re- registered for tax purposes….would we be able to access our superannuation tax free?

2. Would we have to live in Aus for a certain amount of time to access?

3. how much tax would we have to pay if we didn’t come back to Aus , and simply accessed it from the UK?

Registering for tax purposes would make no difference to anything.  It's not Australian tax you have to worry about, it's British tax. 

No matter how you withdraw your super, you'll have to declare it as ordinary income on your British tax return. You need to look at this very carefully, because if you already have a good income, taking the whole lump sum can send you into a higher tax bracket for that year.  We've known people lose half the lump sum to the UK taxman as a result!

You might consider withdrawing smaller lump sums over a few years, or setting up an income stream (pension) instead.  However you still have to declare those as income to the UK taxman. How much tax you'll pay depends how much income you have -- it's just worked out like ordinary tax.

If you decide to move back to Australia to live, you won't have that problem (obviously).   However you'll have to move lock, stock and barrel (i.e. sell your UK home), then you'll cease to be a resident in the UK for tax purposes immediately, and the UK taxman can't touch your super. Unfortunately you can't just pretend to move, stay for a while and move back - the taxman is wise to that, and a temporary move doesn't count.  So if you have no interest in moving back to Australia for the long term, you don't need to read any further.

If you do move back to stay, you may be better off. 

• Your super will be tax free, no matter how you take it (lump sum, transition to retirement scheme, income stream) and you won't lose money on currency exchange.
• You'll be eligible for the Australian government pension (though it is means tested, so it's unlikely you'll get it until your other savings/super runs down in later life).  
• You'll still get your British government pensions (though your husband's will be frozen at the rate on the day he leaves, and you'll get whatever rate is current when you're eligible but it will never increase).

All in all, it's probably worth getting a financial adviser and/or tax advisor to look over your situation and work out what's best.  

 

 

Edited June 28, 2022 by Marisawright

[Angela63]

That’s very helpful thank you so much xx

[Alan Collett]

Hi Angela.

Have a look into Foreign Service Relief in the UK in respect of lump sums received from foreign pension funds.

If unclear please feel able to contact me at bdhtax.com

Best regards.

 

 

[Angela63]

Thank you