| Australia is one of the most popular places for | | | | The transfer must happen within six months of the |
| transferring pension funds from the UK as a major | | | | member becoming an Australian residento The |
| destination for British expats and for Australians | | | | transfer relates only to a period when the individual |
| returning home from working in the UK. | | | | was not an Australian resident, or to a period starting |
| Most of the Brits and many of the Aussies will have | | | | after they became an Australian resident but ending |
| UK pension funds that they want to transfer to a | | | | before the transfer was paido The lump sum amount |
| more tax effective and flexible financial pension like a | | | | is not excessive to the individual's entitlement under the |
| Qualifying Recognised Overseas Pension Scheme | | | | transferring scheme. |
| (QROPS), but an Australian QROPS presents some | | | | If the conditions are not met then the Australian rules |
| problems that schemes in other countries may not. | | | | state that: "You must include in your assessable |
| Australian pension rules are similar to those in the UK in | | | | income for the year the amount of the lump sum that |
| many ways, but have two key differences: | | | | relates to your applicable fund earnings." |
| Down-under tax is the reverse of the UK | | | | In this statement reference to lump sum refers to the |
| UK pension funds grow tax-free and benefits above | | | | transfer value paid but it is the reference to applicable |
| certain levels are taxable. In Australia, the reverse is | | | | fund earnings that causes us more of a problem. |
| applied - funds are taxed but benefits are tax-free. | | | | On their website the Australian Taxes Office simply |
| This means that under the Australian system an | | | | refer to this as the amount of the transfer that is |
| individual is taxed on the growth in their superannuation | | | | assessable to tax and then invite the individual to call |
| fund each year. They can choose to have the fund | | | | their information line. |
| growth tax paid direct by the Australian | | | | Remember that just because you are moving to |
| superannuation fund or personally. | | | | Australia does not mean your QROPS has to live in |
| The tax if paid by the fund is 15% but an individual | | | | the same place. This is what makes a Qualifying |
| pays at their marginal rate. The decision is | | | | Recognised Overseas Pension Scheme so flexible - |
| straightforward - if your marginal tax rate is less than | | | | you can avoid the tax risks and complications by |
| 15%, then pay yourself, if not, let the fund pay. | | | | setting up your QROPS in another jurisdiction while you |
| Heads up on contribution caps | | | | live in Australia. |
| Pension schemes in Australia have a 'non concessional | | | | Tax-free benefits |
| contribution cap' that ring fences some contributions to | | | | That way you do not pay tax on your fund but can |
| a superannuation fund outside of the fund's assessable | | | | take advantage of Australian rules about tax on |
| value for tax. | | | | pension benefits that may allow you to draw the |
| Other rules allow the allowance to be brought forward, | | | | benefits without tax after you are 60. |
| so make sure you discuss this tax quirk that does not | | | | In the event of death, your Australian Superannuation |
| apply in most other countries with your advisor. | | | | fund would be paid to your dependants either as a |
| Watch out for the tax penalty trap | | | | lump sum or pension. |
| HM Revenue and Customs will treat any deduction | | | | The fund maintains its original value and 100% can be |
| from the Australian scheme to pay a tax liability arising | | | | paid to nominated dependants. |
| from a breach of the non-concessionary contributions | | | | On disablement your Australian Superannuation can |
| cap as an unauthorised payment trigger because the | | | | either be paid to you as a pension or lump sum and is |
| deduction is to satisfy a personal tax liability of the | | | | tax-free. |
| individual. | | | | Australia has no death duties, but certain payments to |
| Providing that the UK transfer meets certain conditions | | | | could be subject to tax. |
| there is no specific fund growth charge made against | | | | What pensions can be switched to an Australian |
| the transfer. The taxation of fund growth will start | | | | QROPS? |
| once the transfer is completed. Other conditions are:o | | | | |