Trans-Tasman Super Portability Rules

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If you have ever worked in Australia and had contributions to a superannuation scheme there new rules come into effect on 1 July 2013 that allow you to transfer your Australian Superannuation to New Zealand.

There are certain rules though!

The scheme, called the Trans-Tasman Portability Scheme, applies to people who emigrate between the two countries and intend to stay indefinitely or permanently in the host country. It is important to note that this is voluntary, so you have to choose whether it is the right thing for you to do.

This is an area where people should seek professional financial advice.

New Zealanders and Australians are able to transfer their retirement savings (superannuation) between compatible funds in the two countries. Under this new legislation, New Zealanders and Australians are able to take advantage of a scheme enabling them to transfer their retirement savings between Australian Prudential Regulation Authority (APRA)-regulated Australian superannuation funds and New Zealand KiwiSaver schemes.

What it means in practical terms

If you’ve worked in Australia at any time since 1992, you’ll probably have (or have had at some time) Australian superannuation savings.

You may be able to bring these savings back to New Zealand by transferring them to a KiwiSaver scheme.
Super fund members living in Australia who move to New Zealand will be allowed to transfer their Australian retirement savings to New Zealand.

However:

  • The funds can only be transferred to a KiwiSaver account
  • The funds can not be accessed from the KiwiSaver account to purchase a first home
  • The funds may be accessed when the person reaches age 60 and satisfies the Australian definition of retirement instead of the existing KiwiSaver scheme provisions
  • The funds can not be transferred to any other country other than back to Australia.

It is expected that transfers will only be possible where they are made from market-linked superannuation products. This means that if you have untaxed defined benefit schemes in Australia you may not be allowed to transfer to New Zealand.

Tax impacts

Amounts transferred from an Australian superannuation fund to a KiwiSaver scheme are to be treated in a similar manner to a rollover between Australian funds. This means that the transfer will not be subject to tax in Australia as the money leaves the Australian superannuation fund.

From a New Zealand perspective, the transfer will receive a tax exemption at the point of entry into a KiwiSaver account – ensuring that such transfers will not be treated as dividends for taxation purposes.

What are the benefits of bringing my Australian superannuation funds home?

  • Keeping track of your money is easier.
  • Consolidating your retirement means you pay only one set of fees. In Australia, there’s no restriction on the number of super accounts you can open so if you worked for more than one employer in Australia, it’s possible that you have a number of different super accounts, and may be able to reduce costs.
  • By bringing your money home, you’ll remove the uncertainty on future currency fluctuations.
  • As some Australian rules will still apply to the Australian-sourced portion of your KiwiSaver balance, you will be able to access the Australian-sourced portion of your KiwiSaver balance once you’re over 60 and have met the Australian definition of “retired”.

There may be other considerations that outweigh such benefits which you should consider before transferring any super funds. The tax rates, or the range of asset types available to you, could be influential. If in doubt, seek professional advice.

If you don’t know who your Australian super provider is, or whether you even have Australian superannuation savings, then you might wish to check directly on the Australian Tax Office website which has a number of helpful tools.

Click here to see the official NZ government media release.

 

July 11, 2014