Superannuation: decisions, decisions

by philipin Tax & Complianceon Posted on

Superannuation: decisions, decisionsSuper

If you have (or had) funds in foreign superannuation schemes, let us know.  Recent changes to legislation and further impending changes may affect you.

 

I transferred my Australian super to KiwiSaver.  Is it taxed here?

Transfers from complying superannuation funds in Australia into KiwiSaver won’t be taxed in New Zealand on transfer.  However, future earnings on these transfer funds will be taxed as normal KiwiSaver investments.

This isn’t the case with transfers from other countries – there are New Zealand tax implications on transfers in these cases.  However, under the new rules, if you transfer your non-Australian foreign superannuation into KiwiSaver after 1 April 2014, you will be allowed to make a withdrawal from KiwiSaver to pay your tax bill.

 

I withdrew (or transferred) funds from my foreign super last year.  What are the tax implications in New Zealand?

If you withdrew or transferred funds any time between 1 January 2000 and 31 March 2014, and have not previously accounted for New Zealand tax on these funds, you will be able to meet your tax obligations by paying tax on 15% of the amount transferred or withdrawn.  The remaining 85% of that sum will not attract income tax.  However, it has to be shown in the tax return for either the 2013–14 or 2014–15 income years.

For a limited period of time only, you can choose to calculate your tax liability using this concessionary 15% rate option without penalties or interest, or under existing law (which may involve imposition of penalties and interest).  Talk to us to work through the options that are best for your situation.

 

I’m confused.  I’ve been declaring my foreign super under the FIF rules.  What happens now?

The current foreign investment fund rules will no longer apply to foreign superannuation schemes from the proposed date of 1 April 2014.  However, if you previously declared your foreign superannuation and used the foreign investment fund (FIF) income rules prior to 20 May 2013, you may choose to keep using them in relation to your foreign superannuation interest after 1 April 2014 under the ‘grandparenting’ provisions.

 

Anything else?

Don’t forget also, superannuation is counted as adjusted taxable income when calculating income for child support, family income for Working for Families tax credits, and parental income for student allowances.