International Superannuation from Australia

DanLondon

I wonder if anyone could help, or at least point me in the right direction. I worked in Australia for a year and built up a superannuation of several thousand pounds. I need to cash it in (or more accurately - get a refund) as otherwise the Australian Tax Office will essentially claim it as theirs. It is probably worth about 3000 pounds. The Australian Tax Office are going to take 30%. Will I owe more to HMRC and will I need to declare it on my tax return? I can't find any information online, and it isn't really worth enough to get professional advice as I have found this to be very costly in the past. I am unsure if I should class this as income, or something else, or whether it can be ignored? I may leave the money in Australia but presume this doesn't affect taxation rules.

Many thanks. I'd appreciate any advice.

dzug1

I can't see any way at all that you would be liable to tax in the UK on this money. You'd either be bringing money into the country (no tax) or transferring it to a pension scheme here (again no tax)

Mr_Matey

Hi Dan,
I know a bit about Super, having grown up in Aus and worked in financial planning there. But I'm not up-to-date on all the changes etc, so use the following at your own peril.

The reason the ATO is taxing 30%, is you could have salary-sacrificed into super as a tax-dodge and then "cashed it out". I.e, this money isn't going towards your pension, so shouldn't be favourably taxed.

Based on my understanding:
1) The Australian Tax Office does not tax you if you don't cash it.
2) If you cash it in, it is after tax income, and so would not be taxed further by HMRC.
3) Another option is to transfer the money to a UK pension scheme. The ATO would not take any further tax, as it is transferring to a qualifying pensions scheme.
4) Finally, you could leave the money in Aus, but if you're not going back there I don't see the point to be honest.

Best of luck and hope you had a great time in Aus.

DanLondon

Thank you both for your replies. Much appreciated. Firstly, I had a fantastic time in Australia, and sorely miss it (well, in UK winter time anyway!)

I did salary sacrifice. So I do understand why ATO want to tax 30% - I don't mind, and expected this. I am a higher rate tax payer though, so wouldnt HMRC see it as income (as, seeing as I have now claimed a refund, and therefore its income rather than pension payments?) But you both seem to think its ok, so maybe Ill leave it off next year's tax return?

For some reason I have been told that I cannot transfer the money to a UK pension. I am unsure if this is true, and should look into it first.

Many thanks

Cook_County

As this is not a UK Registered Pension you will need to look at the UK/Australia tax treaty to find out where such distributions are taxed.

Unless the treaty gives relief, you would be subject to UK tax as you are resident here.

DanLondon

Oh that changes things potentially. Have just tried to read the treaty (or at least the relevant part) and dont really understand it. It does frustrate me that this is all so confusing! I am not an accountant and just want to pay the correct amount of tax, but it is so hard to get the correct information!!

Mr_Matey

Hi again,
Yes, it is income, but has already been taxed in Aus. I'm not sure what that means for your UK tax return, but I'm guessing you have to declare both your earnings and tax in Australia? So they will see it has already been taxed.

I have a UK pension and I am allowed to transfer it back to my Australian super account (I've asked). It's as simple as filling out a form. I imagine this goes both ways.

DanLondon

Thanks Matey! Transfer would be the best option, so Ill look into this first!
Cheers for the help.

Cook_County

DanLondon wrote: »

Thanks Matey! Transfer would be the best option, so Ill look into this first!
Cheers for the help.

Matey's view is not correct under UK domestic law. You will doubtless need an experienced IFA.

DanLondon

The Australian Tax office have told me that I CANNOT transfer the pension. It has to be cashed in. I guess I will have to get an IFA. How do I find one that can deal with international issues like this?