Transferring Retirement Savings between Australia and New Zealand: A Comprehensive Guide

Moving between countries can be an exciting adventure, but it also comes with financial considerations. If you’re planning to relocate between Australia and New Zealand, one important aspect to address is transferring your retirement savings.

In this comprehensive guide, we will walk you through the process, rules, tax implications, and transfer limits involved in moving your retirement funds between the two countries. We’ll also shed light on the Trans-Tasman Retirement Savings Portability scheme, which governs the transfer of Australian super funds and New Zealand KiwiSavers.

Transferring from New Zealand to Australia

If you’re permanently or indefinitely moving to Australia, you have the option to transfer your retirement savings from a KiwiSaver scheme to an Australian super fund under the Trans-Tasman Retirement Savings Portability scheme. However, it’s important to note that transfers to Self-managed super funds (SMSFs) are currently not permitted.

Additional Rules around Access to Your NZ Super:

Once your KiwiSaver funds are transferred to an Australian super fund, they become subject to Australia’s superannuation rules.

However, there is a condition regarding the New Zealand-sourced component of your super fund, which cannot be accessed until you reach New Zealand’s retirement age of 65. On the other hand, the Australian-sourced component can be accessed as early as age 60, provided you have retired or met another valid condition of release.

Tax Implications for Transfer and Withdrawal:

Transferring your funds from a New Zealand KiwiSaver scheme to an Australian super fund is not taxed. Furthermore, there are no implications for withdrawing funds from your super account once you’ve met a condition of release.

If you no longer reside in New Zealand for tax purposes, you might face up to 28% potential tax liability on the investment earnings in your KiwiSaver annually. On the other hand, for the Australian super fund, the maximum tax rate is between 10% to 15% on long-term capital gains.

Transfer Limits:

The transfer from a KiwiSaver scheme to an Australian super fund is treated as a personal non-concessional contribution (NCC). The amount you can transfer is determined by your personal non-concessional contribution (NCC) cap.

As of July 1, 2022, the cap is $110,000, or $330,000 if you’re under 75 and utilizing the bring forward arrangements. It’s essential to account for any other personal super contributions you’ve made in the financial year, as this will reduce the maximum transfer amount.

Additionally, if your total super balance exceeds $1.48M, it will affect your NCC cap. Exceeding the NCC cap may result in excess contributions tax, up to 47% on the amount exceeding the cap. Remember, you must transfer the entire balance of your KiwiSaver when moving to an Australian super fund, and if your balance exceeds the transfer limit, transferring your savings won’t be possible.

Transferring from Australia to New Zealand

For those planning to move permanently or indefinitely from Australia to New Zealand, transferring your Australian super retirement savings to an eligible KiwiSaver scheme is an option worth considering.

Additional Rules around Access to Your Australian Super:

To transfer your retirement savings from an Australian super fund to a KiwiSaver scheme, you must have permanently emigrated to New Zealand. You’ll need to sign a statutory declaration confirming this and provide proof of residence at a New Zealand address.

Tax Implications for Transfer and Withdrawal:

Transferring funds from a participating Australian super fund to a New Zealand KiwiSaver scheme is not subject to tax. Additionally, withdrawing funds from your KiwiSaver scheme, once you are legally eligible to access them, is also tax-free.

Transfer Limits:

In contrast to the previous scenario, there are no limitations on the amount you can transfer from an Australian super fund to a KiwiSaver scheme. However, it is mandatory to transfer the entire balance of your Australian fund.

Wrapping Up

Transferring retirement savings between Australia and New Zealand requires careful planning and understanding of the associated tax implications. Being aware of the rules, limits, and conditions will help you make informed decisions about your financial future.

Cross-border tax planning can be complex, so it’s advisable to seek professional advice if you’re uncertain about your specific situation. By navigating the process with foresight, you can ensure a smooth transfer and protect your retirement savings for the future.

Don’t let taxes be a burden – reach out to Odin Tax today and experience professional, reliable, and personalized tax services. Take control of your finances and maximize your returns.