Australia

Details

  • Service: Tax, International Executive Services
  • Type: Regulatory update
  • Date: 4/07/2013

Tax Insights

KPMG's analysis of tax issues and developments.

Jacqui Tucker

Jacqui Tucker
Director, Tax

+61 8 8236 3378

jtucker@kpmg.com.au

Australia and New Zealand portability of retirement savings 

by Jacqui Tucker, International Executive Services Specialist

Aussies and Kiwis have been able to travel and work freely in either country since the 1920s, however there have been tax and regulatory barriers in the way of taking retirement savings along for the journey. On 1 July 2013 an important bridge was opened across the Trans-Tasman divide, with the new ability to transfer retirement savings between Australia and New Zealand.

Unlike citizens of other countries who enter Australia on temporary visas and can withdraw their superannuation upon permanent departure, New Zealand citizens have been unable to withdraw superannuation from Australia prior to reaching preservation age. Australians who now reside in New Zealand are also able to transfer their funds.

 

There are some key rules governing the transfers, which include:

  • portability arrangements are voluntary for individuals and funds
  • transfers must be between Australian complying Australian Prudential Authority (APRA) regulated funds (not self-managed funds) and KiwiSaver schemes
  • transferred savings are generally subject to the rules of the source-country e.g. Australian sourced funds transferred to a New Zealand KiwiSaver scheme cannot be withdrawn to purchase a first home
  • transferred savings must be separately identifiable within the account to enable the tax rules to be applied
  • unlike transfers from other countries, the NZ funds will not be taxed in Australia as a foreign superannuation lump sum payment, but will be subject to the non-concessional contribution cap rules.

 

This change creates opportunities for:

  • individuals to consolidate their Trans-Tasman retirement savings and minimise costs associated with holding multiple accounts in two countries
  • employers with a Trans-Tasman workforce to reduce the impact on their employees of moving between countries, and potentially reduce the cost of assignments between countries. It may be beneficial to highlight this opportunity to the impacted workforce.
 

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