Latest Accounting News
Hot Issues
10% Super Guarantee from 1st July 2021
End of year financial strategies
Closely held payees: STP options for small employers
Videos to help understand accounting topics.
ATO Small Business Newsroom - May / June
New insolvency rules commence
ATO sheds light on crypto compliance focus
Post Federal budget reflections
Federal Budget 2021 - Overview
Building a more secure and resilient Australia
Federal Budget 2021 - Health
ATO signals crackdown on 4 ineligible work-from-home claims
Taxpayers urged to keep work-from-home records
Businesses feeling ‘adverse’ impacts of COVID-safe measures: ABS
New insolvency rules commence
ATO promises not to ‘destroy’ businesses as it resumes debt collection
5 strategies for successful ‘work from home’ policies
Small businesses: don’t forget your FBT concessions
ATO chases $172bn in undeclared contractor income
‘Penalties will resume’: ATO flips the switch on debt recovery
JobMaker Hiring Credit rules and reporting
ATO data-matching: JobMaker
A broad range of Calculators.
ATO Small Business Newsroom
ATO’s good-faith approach to crypto won’t last much longer
‘Much more complex’: ATO introduces new partnership profit guidelines
Cost of retirement up in December quarter
Contributing to Superannuation
Articles archive
Quarter 1 January - March 2021
Quarter 4 October - December 2020
Quarter 3 July - September 2020
Quarter 2 April - June 2020
Quarter 1 January - March 2020
Quarter 4 October - December 2019
Quarter 3 July - September 2019
Quarter 2 April - June 2019
Quarter 1 January - March 2019
Quarter 4 October - December 2018
Quarter 3 July - September 2018
Quarter 2 April - June 2018
Quarter 1 January - March 2018
Quarter 4 October - December 2017
Quarter 3 July - September 2017
Quarter 2 April - June 2017
Quarter 1 January - March 2017
Quarter 4 October - December 2016
Quarter 3 July - September 2016
Quarter 2 April - June 2016
Quarter 1 January - March 2016
Quarter 4 October - December 2015
Quarter 3 July - September 2015
Quarter 2 April - June 2015
Quarter 1 January - March 2015
Quarter 4 October - December 2014
Quarter 3 July - September 2014
Quarter 2 April - June 2014
Quarter 1 January - March 2014
Quarter 4 October - December 2013
Quarter 3 July - September 2013
Quarter 2 April - June 2013
Quarter 1 January - March 2013
Quarter 4 October - December 2012
Quarter 3 July - September 2012
Quarter 2 April - June 2012
Quarter 1 January - March 2012
Quarter 4 October - December 2011
Quarter 3 July - September 2011
Quarter 2 April - June 2011
Quarter 1 January - March 2011
Quarter 4 October - December 2010
Quarter 3 July - September 2010
Quarter 2 April - June 2010
Quarter 1 January - March 2010
Quarter 4 October - December 2009
Quarter 3 July - September 2009
Quarter 2 April - June 2009
Quarter 1 January - March 2009
Quarter 4 October - December 2008
Quarter 3 July - September 2008
Quarter 2 April - June 2008
Quarter 1 January - March 2008
Quarter 2 April - June 2007
Quarter 2 April - June 2006
Quarter 1 of 2021
Articles
ATO’s good-faith approach to crypto won’t last much longer
‘Much more complex’: ATO introduces new partnership profit guidelines
Cost of retirement up in December quarter
Contributing to Superannuation
ATO tipped to pounce once JobKeeper ends
What’s Happening to Small Business Loans in Australia?
ATO Revs Up As JobKeeper Set To End In March 2021
Small businesses urged to register assets before insolvency explosion.
ASIC sounds warning around high-yield bond scams
JobMaker Resources - ATO
Government mulls HECS-style business loans
Industry pressure forces ATO’s hand on STP deadline
$36bn withdrawn from super during COVID-19
ATO opens claims for first JobMaker quarter
Vaccination rates as they happen around the world
Toyota returns $18m in JobKeeper payments
Approaching the dawn
Videos and other resources for our clients
Brazen ATO scam costs Sydney woman $22k
Key dates for the second JobKeeper extension period
Returning expats reminded on tax snares with pensions, investments
80¢ per hour work-from-home deduction method extended
Returning expats reminded on tax snares with pensions, investments

 

With thousands of Australian expats still hoping to return home following COVID-19, a mid-tier firm has highlighted some important tax implications and considerations, including the foreign pension transfers.

 



       


For expats recently returning to Australia or planning to return, HLB Mann Judd Sydney tax partner, Peter Bembrick warned there can be hefty tax bill involved, depending on the jurisdiction and the length of time spent overseas.


Mr Bembrick said in addition to income tax, expats will need to account for any share holdings, employee share schemes – particularly in the event of a redundancy, cash in offshore banks accounts, and pension funds.


There are a lot of considerations that need to be made with the transfer of money out of foreign pension funds in particular, he said, given the tax nuances in this area.


“You need to make sure you’re across the local requirements and what you need to do to get the money out because there’s usually a fair bit of red tape involved and tax issues on the other side,” he said.


For example, the pension system in jurisdictions such as the UK – where an estimated 40,000 Australians reside at any given time – can create adverse tax consequences, he warned.


In order for an expat to be able to transfer a UK pension benefit to an Australian superannuation fund, the fund must be must be registered with HMRC as a Qualifying Recognised Overseas Pension Scheme (QROPS). If it is transferred to a non-approved fund, a tax of up to 55 per cent may apply.


To be included on the QROPS list, an Australian superannuation fund must agree to provide ongoing reporting to HMRC, and the fund must restrict the payment of benefits to members aged 55 or older, except in instances of retirement due to ill health.


In terms of US pension funds, Mr Bembrick said there is “still a fair bit of ambiguity around whether some the different US funds such as 401k plans and other types of US pension funds are regarded as being equivalent to an Australian superannuation fund”.


He also noted that for some clients, deciding to leave the money overseas may actually be the best option.


“I was speaking to someone with large amounts in the US and there’s going to be a lot of tax triggered in the US if he takes this money out, so for the moment he’s just going to leave it in place,” he explained.


Its also important, therefore, that expats also consider where they want to retire, he said.


“If they’re not sure that Australia is the place where they’re going to retire then moving everything here may not always be the best answer,” he said.


Mr Bembrick said expats should also be aware that there is a six-month rule where the foreign super interest will generally be tax-free if it is transferred to Australia within six months of them becoming a resident of Australia or their foreign employment terminating.


He also stressed the important of expats seeking specialist advice in this area, given the complexity of the tax laws.


Property is another key consideration that they need to make, he added.


“Some countries charge non-residents a higher rate of transaction tax or tax capital gains on profits from property investments and, in Australia, if you’ve retained property while abroad, you may be better to move back first before selling,” he said.


“This applies particularly to the former family home, as non-residents selling property are now excluded from the CGT main residence exemption and the related ‘six-year absence’ rule.”


Mr Bembrick noted that the CGT discount on the sale of investment properties is not available for any period after 8 May 2012, during which someone is a non-resident.


“For investment properties already owned at the time they left to move overseas, there will need to be an apportionment of the CGT discount for the relevant periods. A similar apportionment applies for periods between the date they return to Australia and a later property sale,” he explained.


Shares and managed funds will also need to be carefully assessed, he said, particularly if someone has become a non-resident during their time overseas.


“These types of investments are generally treated under the CGT rules as having been sold at their market value at the time that tax residency changed, triggering deemed capital gains or losses,” he said.


“The good news is there would be no further Australian CGT implications if these assets are actually sold while a non-resident. However, if they are still owned when Australian tax residency is resumed, they – along with any new investments – will be deemed to be re-acquired at that time for their current market value, so any future capital gains or losses on sale would relate only to the movement in value during the second period of Australian tax residency.”


 


 


Miranda Brownlee
07 January 2021
smsfadviser.com


 




18th-January-2021