COMPLIANCE
Transferring from the dark side – part one Bringing pension scheme payments back to Australia from overseas is a multi-faceted process. In part one of this multi-part feature, Jemma Sanderson provides some useful tips and traps to look out for regarding these situations.
JEMMA SANDERSON is a director and head of SMSF and succession at Cooper Partners.
With our global workforce, and particularly many people having being trapped in Australia or overseas due to COVID, or perhaps now intentionally, their superannuation position across multiple jurisdictions has become an increased area of practice. It is desirous to transfer their benefits to Australia (once they have settled here for good) for the following reasons: • control/flexibility over the investments, • to mitigate the foreign exchange risks, • to have an asset that can be left to their beneficiaries when they die, and • to obtain a more efficient taxation position. Navigating through the various jurisdictions is challenging and requires a comprehensive understanding of the Australian superannuation and tax provisions. There is much misunderstanding about how such transfers are undertaken in practice, with many individuals receiving advice that only covers one side of the transaction – the ‘dark side’ of the jurisdiction where the money is currently held, which can have substantial adverse implications in Australia. Without proper consideration, the above intentions may not be met, particularly the last one. Overall, where a member has benefits in a United Kingdom pension account, to transfer that benefit to Australia, several things must be in place: • the member has to be 55 or older, • the receiving superannuation fund needs to be a Registered Overseas Pension Scheme (ROPS), • any rollover needs to take into consideration: a. the taxation implications in Australia, b. the contribution limits in
Australia, and c. the taxation implications in the UK (this is dependent on b. above and whether any amount rolled over is refunded back to the member in Australia), and • if the money is to be taken as a lump sum directly to the individual (from a UK perspective), the Australian and UK taxation implications need to be considered. There are obviously a substantial number of other foreign jurisdictions where individuals may hold pension benefits. Each jurisdiction will have different rules and different ways that they will interact with the Australian rules. We recommend specialist advice in this regard is always sought to address all the relevant considerations.
Australian taxation of foreign pensions Where an individual receives pension payments from a foreign pension, generally they are fully Continued on next page
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