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Changes as From 6 April 2012 to UK Pension Transfers

Legislation has now been passed by HM Revenue & Customs which change the QROPS rules for transferring UK pensions to Australia as from 6 April 2012.

The changes are to try to stop UK residents from transferring their UK pension money to a QROPS pension scheme based in a foreign country with a liberal pension tax arrangement, waiting five years and then being able to access 100% of their pension money.

The principle of UK pensions is that most of the pension money should be retained to purchase an annuity to produce a regular income stream in their retirement.

A payment from an Australian superannuation fund made from money transferred into the fund from a UK pension must be reported to HMRC,  if it is made either

  • within 10 years of that transfer, or
  • to someone who is a UK resident in the tax year of the payment ,or
  • to someone who has been UK resident in any of the previous 5 tax years of the payment

There are naturally a number of factors to consider when thinking about transferring your UK pension to Australia, for example:-

  • You will pay no tax in retirement, however if you leave your fund in the UK, it will be taxable in Australia, regardless of whether you transfer it to Australia or not.
  • Once transferred to Australia, you can have a tax free access to the entire fund as a lump sum or pension in retirement.
  • Transfer and you will no longer be dependent on exchange rate fluctuations.
  • Once transferred your fund can continue to grow into your retirement and you have greater control over how it is invested.
  • On death the entire balance 100% can be passed to your spouse or beneficiaries.
  • Consolidation of your retirement benefits.

HM Revenue & Customs (HMRC’s)  Migrant’s Limitation On Your Fund’s Investments

The part of your Australian superannuation fund which is referable to money or assets transferred into the fund from the UK is called the “taxable asset transfer fund” (TATF).

If the TATF is used to invest in those types of assets which would not have been allowed had this money remained in a UK pension fund (“taxable assets”) then they are subject to substantial additional UK tax.  This would apply for example to residential property, holiday homes, timeshares, fine art, antiques, fine wine, jewellery, boats, cars etc.

Therefore you need to be very careful when considering trying to use your Australian superannuation fund to invest in such assets. You will need to consider both the Australian rules of investment and the UK ones. This applies however long you have been continuously resident in Australia.

We strongly advise you seek professional advice before transferring your pension or investing within your superfund.

Could you benefit from a complimentary detailed UK Pension Report and Tax Analysis comparison on how your benefits will be treated if they remain in the UK against how they will be treated if you transferred these funds to your Australian superannuation scheme?

If you have any questions, for a free and confidential discussion, please do not hesitate to call us on

08 9301 2200, or contact us today.

We greatly value our clients and are committed to honouring the trust they place in us by creating visible results for them. Get in touch to find out how we help our clients maximise profits, minimise tax, and invest the balance for growth.

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