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Superannuation is the money set aside for your retirement. Since 1 July 2013, Australia and New Zealand have had reciprocal transfer schemes for superannuation funds between the two countries – referred to as the ‘Trans-Tasman retirement savings portability scheme. This allows for less hassle when you move within the Trans-Tasman bubble. However, there are some conditions that need to be met, explained below.
What are the specific rules for transferring funds from the KiwiSaver scheme to Australia, and vice versa?
From 2013, the Trans-Tasman recognition of KiwiSaver and Australian super funds is a major leap forward for individuals who move between our two countries, as it almost integrates the two regimes – although each has its own ‘wrinkles’, such as slightly different age thresholds.
The relevant Australian funds have to be willing to accept such transfers, so clients need to check this in the selection of their new fund before committing. To manage each regime’s rules, KiwiSaver amounts are tagged as such in Australian funds and KiwiSaver accounts are tagged with Australian contributions transferred to New Zealand.
There are specific forms and information that you will need to provide to the receiving fund – and following these is vital to get the right result.
Is the double taxation agreement between Australia and New Zealand relevant for super transfers?
There is an interesting difference in the treatment of pensions paid between Australia and New Zealand that is reflected in the relevant double tax agreement, as it exempts a pension in the country of residence if it was exempt in the country of source. This is a variation on the usual model for Australian tax treaties.
What are the key options generally available to an Australian who has funds in the KiwiSaver scheme?
You can leave the funds in the KiwiSaver scheme until you hit the conditions for release (age 65 currently) in New Zealand (And then decide whether to cash out in whole, part and/or take a pension) or you can decide to transfer the balance to an Australian super fund that accepts such transfers.
Can ‘unclaimed’ or ‘lost’ super in Australia be transferred directly to a KiwiSaver account?
Prior to legislative changes in 2020, people who had ‘unclaimed’ or ‘lost’ super in an Australian account would have the money transferred to the ATO, and then you would have to transfer the lost super balance into an Australian super fund before you could transfer it to a KiwiSaver account.
This was a laborious process and incurred additional transfer and accounts management fees for that intermediary Australian fund. The 2020 legislative change now allows the transfer of such ‘unclaimed’ or ‘lost’ super directly from the ATO to a KiwiSaver fund provider – saving you both time and unnecessary fees in the process.
How can Tax Controversy Partners help you?
The partial integration of the two super systems provides an opportunity for you to obtain advice on picking the best options for your particular circumstances – choosing whether to shift your super accounts between the two countries. We have seen a number of clients whose affairs have been mismanaged, either because they did not seek advice before doing things or sought advice from an advisor who did not understand the relevant issues well enough to help them manage those issues. Given the considerable complexity in these issues, the right advice can be essential to avoid big down-sides for you.
At Tax Controversy Partners, our experienced lawyers can assist you in understanding your options and explain the taxation and superannuation regulatory implications of your potential choices. Please contact us using our online contact form, via email at admin@taxcontroverypartners.com.au or by phone at 02 8513 3813.