|CHANGES IN 2017|
Form APSS251 (QROPS notification) changed on 8 March 2017. If you are making an application for your fund to go on the ROPS notification list you must use the new form (it contains new undertakings).
Existing QROPS must complete form APSS240 (containing the same new undertakings). It must be sent by post to HMRC to arrive by 13 April 2017. The ROPS notification list will be suspended for 4 days from 14 April 2017 and when republished, any fund which has not sent in this form will have been removed.
Please note that the new overseas transfer charge will not apply to fund members who transfer from a UK registered pension scheme to an Australian QROPS provided the member is an Australian tax resident at the time, and continues to be an Australian tax resident over the following five clear UK tax years.
|This article covers the changes in the Finance Bill 2017 currently before the UK parliament, in so far as they are relevant to UK migrants and Australian ex-pats who wish to transfer their UK pension money to Australia. Some of the changes were announced on 8 March 2017 in the UK Spring Budget and some were announced on 5 December 2016. To search the page for the changes, look for "9 March 2017" (which is when the changes announced on 8 March 2017 will take effect) and "6 April 2017" (which is when the other changes will take effect).
Please note that amendments to the Finance Bill 2017 could affect the contents of this page.
If you want to look at the proposed changes yourself you can go to:-
Changes in Australian law from 1 July 2017 are also covered in this article.
In summary, since 6 April 2015 as a result in a change to UK pension law, in order for a fund to be a QROPS, the benefits payable to the member under the fund from UK sourced pension money must not be payable before the member reaches the age of 55 unless the member has retired on ill-health grounds. See why this is so (opens in new window).
Firstly a correctly drafted trust deed is required, one which will satisfy HMRC. This would prohibit a release of funds when not permitted under UK law (age 55 or retirement on ill-health grounds). Generally, it would also prohibit membership of the fund to those who have reached the age of 55, so that all members of the fund must be 55 or over (some variation of this may be permitted, requiring special drafting of the trust deed).
Secondly it is important to bring to the attention of HMRC that your fund is using a correctly drafted trust deed. Also the trustees or trustee of the fund (in UK terms, the "scheme manager") must give various undertakings to HMRC. These things are done by using the form APSS251 and by sending a copy of the deed to HMRC with a covering letter. My deed is known to HMRC and was used by the very first successful 55+ QROPS applicant in the post 6 April 2015 regime (and the vast majority of the others since then).
The over 55 QROPS works with brand new funds, as well as with existing funds, including those which have previously been removed from the QROPS list (now called the "ROPS notification list").
Since you can have as many SMSFs as you like, some people have a separate fund dedicated to receiving the UK pension money (this may help the fund to comply with the investment restrictions and the withdrawal restrictions). On the other hand, each fund will have auditors' fees. There will also be accountants' fees unless you do this yourself.
For a new fund, my packs enable you to establish your own SMSF with a trust deed known to HMRC. The pack also advises on how to complete Form APSS251 and how to submit this to HMRC, and then how to transfer UK pension moneys or assets to the fund. See the qrops 55+ set up packs.
For existing funds there is a pack available to enable you to amend its trust deed, and to apply for the fund to go on the ROPS notification list. The pack has an amending deed, covers how to complete Form APSS251 and how to submit it to HMRC, and then how to transfer UK pension moneys or assets to it, see existing smsf to qrops 55+ pack.
In all cases, it is important to keep the fund in operation at least till it receives its first notice of compliance from the ATO (after the first audit).
It is also important to be an Australian tax resident at the time of the transfer and to remain so for five to six years. See here for the reason for this.
Please note that HMRC is careful to say that inclusion in the ROPS notification list does not guarantee that a fund is in fact a QROPS. This means that there is no guarantee that a transfer to a fund on the list will not attract UK tax. In the pack, I advise that in my professional opinion if you use my trust deed and follow the steps in the pack and as a result the fund appears on the ROPS notification list, then a transfer of UK sourced pension money can be made to your fund without incurring UK tax. Please note however, that no lawyer takes the responsibility of guaranteeing a particular outcome. For that, you would need an insurance policy. Having said that, hundreds of such transfers have now taken place since September 2015 and so the over 55 QROPS can now be regarded as tried and tested.
If your UK pension money is in a personal pension scheme (defined contribution scheme, now known as a money purchase scheme) then it can be invested in the way permitted by such a scheme. Many such schemes are in managed funds, or the money can be in a SIPP (self invested pension scheme). One real advantage in keeping the money in such a scheme is that under UK pension and tax law, earnings within the scheme are tax free. When you transfer the money to Australia however, those earnings (since the date when you became tax resident in Australia) will be taxable under Australian law either at your marginal rate of tax or, if you make an election for the fund to pay the tax, at 15%. This assumes the transfer is done more than 6 months after you became Australian tax resident. If within 6 months, then there would be no Australian tax to pay see the six month window and Australian tax payable on the transfer into the QROPS. Please note that whilst the money is in a managed fund or SIPP it does not have to be kept in pounds. The important thing is who holds the money, not which currency it is in.
If your UK pension money is in a salary based (defined benefit) scheme then you will have to decide whether to keep it in that scheme or to transfer it out to a SIPP or similar and keep it there until you reach age 55. There will be many factors affecting this decision. One will be whether the current Cash Equivalent Transfer Value (CETV) is a particularly good one because of current low UK interest rates. Another will be whether there is any age limit in the salary based scheme which restricts your ability to transfer out of the scheme (you need to check this with the scheme manager). A third will be whether it is prudent to transfer out of such a scheme at all, bearing in mind it will usually be inflation proof and provide benefits to your spouse or family on your death. And a further consideration will be whether the scheme is currently properly funded by the employer or whether it will continue to be properly funded. Another factor will be whether it is possible that transfers from the scheme may be prohibited in the future by a change in UK law. Finally it may be that in order to transfer the money to Australia at the age of 55, you will need to split it into different funds in order to achieve the transfer without exceeeding the non-concessional contribution limit (see just below). If so, then you will need to do this by transferring to a SIPP anyway at some point.
1 This reduces to $100,000 from 1 July 2017. 2 This reduces to $300,000 from 1 July 2017 (there are tapering transitional provisions if the bring forward provisions were invoked prior to the change).
You need to consider the non-concessional annual contributions cap with three more things in mind.
The first is that if any part of the amount transferred from a UK pension fund to an Australian superannuation fund becomes that fund's assessable income, then that part does not count towards the cap. What part of the amount transferred becomes the fund's assessable income? Well, it is the amount assessable to tax based on the growth of the UK pension fund since you became an Australian tax resident which you have elected on form NAT 11724 shall be paid by the fund. See Australian tax payable on the transfer into the QROPS below how this may be calculated. You can see from that section that you can elect on form NAT 11724 for the fund to pay the tax on it, instead of you paying it personally. If you make that election the growth element (or that part of it that the election covers) becomes the fund's assessable income and does not count towards the cap.
The second thing to bear in mind is that if you are going to send the money in separate tranches, then each tranche should be from a separate fund so that there is nothing left in the fund after the transfer. This is important to enable you to elect for your superannuation fund to pay the tax on any increase in value of the tranche since you became an Australian resident. This is because the election cannot be made unless the transfer extinguishes the fund being transferred. So the fund must either be reduced in some way or split into separate funds and each fund transferred separately. The usual way to split the fund is through a UK SIPP. There are several SIPP providers who are now used to offering this service. This won't be as important if there has been little growth in the fund since you became as Australian tax resident (because in that case you may not need to make the election).
In these circumstances there are comprehensive provisions which deal with the consequences. The ATO issues an "excess non-concessional contributions determination" upon processing the fund's annual tax return for the year in question and invites the member to complete a Form 74824 (Excess Non-concessional Contributions Election Form).
The member is given three options on this form.
Option 1 is to elect to release the excess to the member. If this is done, the amount the member should receive from the fund is the amount of the excess over the cap plus 85% of the "associated earnings" amount. The associated earnings amount is a notional amount calculated by the ATO and contained in the ATO's excess non-concessional contributions determination. It is calculated on the assumption that the excess amount is in the fund from the start of the financial year until the date of the determination, and that its earnings are at the rate of the ATO's General Interest Charge (GIC) calculated on a daily compounding basis. The release of 85% of this amount is because on the same notional basis, the fund would pay 15% tax on the same associated earnings. The 85% is the associated earnings amount is added to the member's assessable income and so the member must pay tax on this amount at the marginal rate of tax. The member gets a 15% non-refundable tax offet to represent the tax notionally paid by the fund.
There are two examples on the ATO's website:
Example 1 - ReginaldYou can see that the calculations of the associated earnings in these two ATO examples differ and currently this remains unexplained, so they should be regarded as providing a rough guide only. In Reginald's case, it can be seen that roughly a $100,000 excess contribution would be taxed at just over 4% where the member's marginal tax rate is 37%. Extrapolating from this example, for a member with a marginal tax rate of 45%, a $100,000 excess contribution would be taxed at 5.7% as a rough calculation. Belinda seems to have done a lot better. I would welcome some real life examples to post here.
R, who has a marginal tax rate of 37%, exceeds the non-concessional contributions cap by $100,000. The ATO issues an excess non-concessional contributions determination which shows an associated earnings calculation of $19,000. The determination calculates the total release amount of $116,150 ($100,000 plus 85% x $19,000). R elects option 1 on form 74824: "release amounts from superannuation".
Therefore R receives $116,150 from his super fund. The ATO adds $19,000 to his personal assessable income, increasing his personal tax bill by $7,030, however R can use a tax offset of $2,850 (15% of $19,000), so the net additional tax to pay is $4,180.
Example 2 - Belinda
B exceeds the non-concessional contributions cap by $100,000. On 1 November following the tax year in which the excess contribution is made, the ATO issues an excess non-concessional contributions determination which shows an associated earnings calculation of $13,814. The determination calculates the total release amount of $111,742 ($100,000 plus 85% x $13,814). B elects option 1 on form 74824: "release amounts from superannuation".
Therefore B receives $111,742 from her super fund. The ATO adds $13,814 to her personal assessable income, however she can use a tax offset of $2,073 (15% of $13,814).
Option 2 is to elect to pay excess non-concessional contributions tax. The fund must pay to the member this amount of tax payable but may keep the remainder of the contribution. The excess non-concessional contributions tax is on the excess over the cap at the top marginal tax rate (currently 49% but falling to 47% from 1 July 2017).
Option 3 is to state that the member's super fund balance (in all super accounts) is nil. This has the same consequences as option 1 except that the fund is unable to pay any money to the member (this might happen if the transferred money has already been paid to the member and the member has no other super accounts).
Since under any of these options the member is receiving personally some UK sourced pension money, the effect of UK law should also be considered here. Whether special arrangements need to be made will depend on whether the member has the necessary period of non-UK tax residence. See withdrawal restrictions and the incidence of UK tax below.
Also you will be unable to take advantage of the enhanced "bring forward limit" for transfers from that age (see "The Australian non-concessional cap" above).
Once you reach 75 you will not be able to make any transfers from a UK pension fund to an Australian superannuation fund because you are not permitted under Australian law to make non-concessional contributions after that age.
In the case of an occupational pension scheme (one funded by your employer), then you will be able to ask for the Cash Equivalent Transfer Value (CETV), which is a lump sum amount representing the value of your scheme. If you are within one year of the normal pension age however, you may lose the right to transfer the cash equivalent of the scheme. You can find out about this by asking the scheme administrator. In particular you need to find out when you will lose the right to transfer.
In addition to this, salary based (defined benefit) schemes offer substantial additional benefits, for example increases for inflation and a pension to your spouse on death which benefits will inflate the CETV. Should you consider transferring the money from such a scheme you will need advice about the prudence of this. The provision of such advice is now a UK legal requirement unless the value is small.
From 6 April 2015 the UK government restricted transfers from unfunded public sector defined benefit (salary based) occupational pension schemes. These are the pension schemes in the NHS, Armed Forces, Civil Service, Police, Teachers, Fire-fighters and some others. This restriction has been done by an amendment to section 95 of the Pension Schemes Act 1993 which stops transfers out from such schemes to other schemes holding the pension benefits as cash or assets. Note also that there is also a new power to cap the Cash Equivalent Transfer Value for funded public sector defined benefit schemes. This is said to be to protect the public purse, if required.
Note that when transferring money into the QROPS, there is no need to change its currency. The transfer is effected by changing its ownership, not its denomination. So it can be retained in foreign currency if desired.
However, if the amount transferred has increased in value since you started your Australian tax residency (unless the transfer was within 6 months of your Australian tax residency - see below), there will be a taxable element as far as Australian tax is concerned. If you think of it, if you had transferred the money into an Australian superannuation fund on the day of your arrival in Australia, any increase in the value of the fund would have been taxed at 15% since then (in Australia a superannuation fund in its accumulation phase pays 15% tax on its income).
There are various rules which apply to the tax calculation. Firstly, if the money has increased in value because of contributions, then this part of the growth will be ignored.
In the case of a defined contribution (money purchase) scheme then provided there have been no contributions since the date of permanent residence the calculation is the difference between the amount transferred and the value of the fund at the time of permanent residence. The modern approach of the ATO (based on ATO ID 2015/7) is that only the exchange rate at the time of receipt is to be used in this calculation. This means that if the money was held in the fund in a foreign currency, the calculation should be done in that foreign currency and then converted to Australian dollars at the exchange rate at the time of transfer. However, the ATO may be willing to consider using differential exchange rates in an appropriate case where this would be fairer.
It is wrong to calculate the growth element of final salary (defined benefit) scheme by taking the cash equivalent transfer value at the time of transfer and deducting from this the cash equivalent transfer value at the time of permanent residence. This is because there are a number of elements involved in the change in value: final salaries in the employment, changes in periods of qualifying service, the age of the employee, the health of the employee, inflation, index linked stock returns at the time of valuation, the effect of scheme's rules and the extent to which the scheme is funded. These elements may be unrelated to "growth", and it is only the growth that is taxable. They may also be only notional at any one point in time. Instead, the modern approach of the ATO is to apply tax based on inflation since the date of permanent residence.
Liaison with the ATO about the tax to pay can either be by direct contact (see the ATO site for this) or by obtaining a private ruling.
Who pays the Australian tax arising on the increase in value? You can pay the tax at your marginal rate of tax or you can elect in writing on form NAT 11724 to have the fund pay the whole or a proportion of it at 15%. Whether you make that election may depend on whether you have any taxable earnings in Australia in the year in question, and whether you could make use of any tax loss if the value has gone down.
There are three further things to note about the election. Firstly, there is a requirement in section 305-80 of the Income Tax Assessment Act 1997 that in order to make the form NAT 11724 election all the money in the UK pension fund must be transferred. This means that if the money is transferred in tranches because of the non-concessional contributions cap, each tranche must extinguish the fund sending the money. See the transfer: how financial caps apply for a discussion on whether you may have to send the money in tranches.
Secondly, making the election can affect the amount counted towards the contribution cap. The amount you elect as assessable income of the fund does not count towards the contribution caps. As an example, suppose your UK pension fund was worth $170,000 at the time you became tax resident in Australia. When you transfer it to your Australian superannuation fund it is worth $200,000. This means that the amount assessable to tax is $30,000. Then, provided you elect on form NAT 11724 for the fund to pay tax on this element (that is, $30,000 x 15%) for the purpose of the contribution cap, the actual contribution that year is regarded as $170,000 and not $200,000.
Thirdly, the election can create a "taxable component" in the fund. If you intend not to withdraw from the fund until the age of 60 then this is not an issue. But any taxable component in the fund withdrawn prior to the age of 60 (on being permitted to do so, for example on retirement or transition to retirement) may be taxable on receipt. This is because by section 295-200(2) of the Income Tax Assessment Act 1997 these monies are added to the assessable income of the fund. Lumps sums are only taxable on receipt if they exceed the low rate cap, which is $195,000 for the 2016/17 tax year, but income streams are treated differently.*
From 1 July 2017 tax will be payable on any type of withdrawal before the age of 60, where there is a taxable component in the fund.
When does the six month period start? For migrants into Australia, it is when the migrant arrives with the intention of staying permanently (Tax Ruling 98/17). For returning Australians, it is when they return to live in Australia. For those who arrive on temporary visas it will depend on various factors (see Tax Ruling 98/17). And on my reading of the legislation, the date of transfer is the date of receipt of the money and not the date of transmission, so if your fund has done well, you need to get the timing right.
There is a similar 6 month window in the case of an Australian tax resident who has worked overseas. Then if a superannuation lump sum is paid upon the termination of that employment, the 6 months starts at the date of termination. There are certain other conditions which need to be satisfied for this tax exemption to apply.
There is also a 6 month window in the case of an Australian tax resident who personally receives a lump sum from a foreign pension fund. If this is properly regarded as a lump sum, then only the growth element since becoming an Australian tax resident is taxable (as the taxpayer's top rate of tax). However there is no tax if it is paid within six months of becoming tax resident.
|Is there tax relief on contributions?||Yes||Yes|
|Is there a limit on contributions?||Yes||Yes|
|Does the fund pay tax on contributions at the time of receipt?||Yes, normally at 15%*||No|
|Does the fund pay tax on its income?||Yes, normally at 15% while in accumulation phase, zero when in retirement phase||Largely no|
|What proportion can be taken as a lump sum, when permitted?||100%||100%|
|Are withdrawals taxed?||After the age of 60, no||Yes, except for the first 25%|
As you can see from the above, the main difference between the two regimes is that whereas in the UK the fund pays no tax on the contributions nor on its income during the accumulation phase (before a pension is taken), in Australia the fund does pay tax on these. Once a pension is taken, however, this is reversed: in the UK most of the pension receipts are taxed, but in Australia (after the age of 60) they are not.
However an Australian superannuation fund will not pay tax on a transfer-in from a foreign pension scheme because this is classed as a "non-concessional" contribution. Tax will be payable on the increase in value of the lump sum transferred-in since the start of Australian tax residency if the transfer is after the 6 month window: see timing of the transfer into the QROPS - the six month rule and Australian tax payable on the transfer into the QROPS.
If your pension money remains in the UK pension system, then all payments from the UK pension to you as an Australian tax resident will be subject to tax as determined by the Double Taxation Convention. Under the Convention, for Australian tax residents, "pensions" are only taxable in Australia. Lump sums paid from a UK pension fund are probably not "pensions" and are therefore chargeable to tax both in the UK and in Australia (although in Australia if it is properly regarded as a lump sum it is only the growth element that is taxed).
If having made the transfer from the UK pension scheme to the Australian QROPS, the member ceases to be an Australian tax resident within the relevant period then the 25% tax will be chargeable as if it had been chargeable in the first place. The UK government's current intention is to make this work the other way, so that if the 25% tax is paid and subsequently the member becomes resident in the country of the QROPS, the tax can be recovered back.
What is the relevant period? It is five full UK tax years from the date of the transfer. UK tax years start on 6 April. So the five full tax years could effectively be six years less one day (if the transfer were done on 7 April).
But the UK sourced pension money will also be covered by UK tax provisions until a period time has passed.
During that period of time the UK sourced pension money cannot be transferred to a non-QROPS without incurring UK Tax. And withdrawals of the UK sourced pension money to the member will need to be done carefully to make sure it is done by a pension commencement lump sum and pension payments covered by the Double Taxation Convention. Otherwise UK tax may be payable. See more information about this here
After that period of time, a transfer of the money to a non-QROPS or a payment to the member can be done without incurring UK tax. Note that the investment restrictions continue to apply after the period.
What is the period of time? For transfers before 6 April 2017 the period is five clear UK tax years of non-UK tax residency. For transfers where the money was received by the fund on or after 6 April 2017 the period is the later of ten clear UK tax years of non-UK tax residency or five years from the date of the transfer. Since a UK tax year runs from 6 April to 5 April, potentially a member might have to wait up to six or eleven years respectively for the period to expire. If you revert to UK tax residency, the period would start again.
You need to be careful about the start date of your tax residency and that you have not become tax resident in the UK again inadvertently. Since 6 April 2013 there has been a new test for tax residence in the UK - see the RDR3 test. You should bear in mind that it is possible to be tax resident in two countries at once.
The comments here are about payments to the member from UK sourced pension money in an Australian QROPS.
The member must be aged 55 or over, or retired due to ill-health under UK rules (or otherwise able to withdraw as permitted by UK law after 6 April 2017). Otherwise such a payment will be unauthorised and will be subject to UK tax.
Even where one of these conditions is met, it does appear that without making special arrangements, a payment of UK sourced pension money made by the Australian fund to the member within the period can be chargeable to UK tax. To explain, the types of payments which can be made from UK sourced pension money changed on 6 April 2015, and as far as UK tax is concerned a payment will fall into one of these categories:-
The UK tax result (for payments within the period) would appear to be that:-
1 In UK terminology the pension arrangement is called a "Flexi-Access Drawdown Fund" and if there is a lump sum of this type it is called a "Pension Commencement Lump Sum" 2 Depending on its terms and who is paying it, this is called a Scheme Pension or a Lifetime Annuity 3 These are called "Uncrystallised Funds Pension Lump Sums"
This assumes that such payments are outside the Double Taxation Convention because they are lump sums and not "pensions". There is some suggestion to the contrary in the Pension Tax Manual (PTM113210) but this refers to Double Taxation Conventions very generally and cannot be relied on for the UK-Australia DTC.
To be absolutely sure that a payment to the member is made in the correct category special arrangements are required. There is also an obligatory notice to the member and a report to HMRC. I can provide advice on these matters, including the necessary paperwork.
This will also be important where a member has made transfers into the QROPS fund which exceed the non-concessional contributions cap. As has been seen above the member may opt to receive the excess from the fund plus 85% of the notional applicable earnings arising from the excess contribution. Where the member is 55 or over, but has not yet completed the relevant period of time referred to above, then the member will need to make special arrangements to ensure that the payment is made in the correct category as listed above. Again I can provide advice on these matters, including the necessary paperwork.
The period used to be three years. The five year period applies to events after 5 April 2017: amendment to section 267 of the Inheritance Tax Act 1984 (by the Finance Act 2016).
From 9 March 2017 the reporting rules changed. The information which must be given is shown on the relevant forms or on the above HMRC or UK Gov pages. Below should be treated as a summary only, and reference should always be made to the correct form and directly to the HMRC requirements:-
The reporting requirements are in the aptly named Pension Schemes (Information Requirements - Qualifying Overseas Pension Schemes, Qualifying Recognised Overseas Pension Schemes and Corresponding Relief) Regulations 2006. This has been amended several times.
A QROPS now has to re-notify HMRC at five-yearly intervals that it continues to meet the conditions for a QROPS. If a QROPS fails to re-notify, it will lose its status as a QROPS.
When is the first time this will need to be done?
This depends on the date of the letter from HMRC granting QROPS status. For QROPS whose letter date is 1 April 2010 or later, then it will on the fifth anniversary of the letter and every five years anniversary after that. For QROPS whose letter date is before 1 April 2010, then it will be a date notified to the QROPS, but it will not be before 6 April 2016 or later than 31 March 2017.*
HMRC will send a reminder to the QROPS - this may be post or it may be sent by email but the requirement to re-notify is not conditional upon receiving the reminder. It is therefore essential that a QROPS should ensure that it has given its current postal address and email address to HMRC. If they change then HMRC can be notified on form APSS251A.
HMRC have decided to abandon the QROPS online system. However, it would appear that the new forms for use from 6 April 2017 will be online forms. Apart from that, it would appear that all contact will need to be by post or email.
If the TATF is used to invest in those type of assets which would not have been allowed had this money remained in a UK pension fund ("taxable property") then they are subject to substantial additional UK tax. This would apply for example to residential property, holiday homes, timeshares, fine art, antiques, fine wine, jewellery, boats, cars etc.
Therefore you need to be careful when considering trying to use your Australian superannuation fund to invest in such assets. You will need to consider both the Australian rules of investment and the UK ones. This applies however long you have been continuously resident in Australia. The rules apply to all QROPS and former QROPS. They don't apply to a non-QROPS into which the UK sourced money has been legitimately rolled over, unless (from 6 April 2017) that fund is a non-UK registered scheme.
In some cases, such as if you are in receipt of a UK scheme pension (where you are receiving pension payments for life), the receiving scheme must mirror the arrangement and provide benefits "like for like".
In other cases, such as if the transferred money is in a member's drawdown pension fund or flexi-access drawdown fund, then there are two important rules. Firstly, the money must be transferred into an arrangement in which no other sums or assets are held. This can probably be achieved within an Australian SMSF by having a segregated account (if permitted by the trust deed). Secondly, the current HMRC view is that the whole fund must be transferred. This could interfere with the need to split the fund into separate funds in order to be able transfer the money in a tax efficient way.
Australian tax residents who have reached the age of 55 but have UK pension money which is still within the UK pension regime might be tempted to take 25% of the UK pension money "tax free" as a "pension commencement lump sum". However, it will have two consequences. Firstly, the growth element since Australian tax residency will be taxed (and payable by the member at the member's top personal tax rate) unless the transfer was within six months of tax residency: see the six month window. This is because in Australian law it is regarded as a lump sum received by the member from a foreign pension fund. Secondly, the lump sum payment will result in the remainder of the UK pension money going into a UK drawdown pension arrangement. Depending on the amount in the fund, this could cause problems with the transfer (because it may need to be split - see above, and this would be more difficult to do). Also a segregated account will be required within the fund when the transfer takes place.
Regulation 4 of the Pensions Schemes (Application of UK Provisions to Relevant Non-UK Schemes) Regulations 2006.
25 March 2017
Copyright © Jeremy Gordon
DirectDocs® is a registered trade mark in Australia.