When it comes to managing Australian expat superannuation, the considerations that an expat needs to take are very different to that of an average superannuation investor in Australia.
This is one of the main reasons why you need to deal with a specialist when it comes to managing your superannuation when you are offshore.
The good news is that the superannuation laws and regulations do not differentiate between a resident and a non-resident.
Provided an Australian expat meets the relevant Superannuation Industry (Supervision) Act contribution rules, a fund trustee is able to accept contributions from a non-resident.
The Australian superannuation system provides a very effective form of retirement planning and, used correctly, can ensure that when it comes time to slow down you have a portfolio that provides for you and your family well into your later years.
It is important to have the peace of mind knowing that what you are achieving now will assist you in obtaining a self-sufficient retirement in the future.
The good news is that the superannuation laws and regulations do not differentiate between a resident and a non-resident.
Listed below are the top 4 tips for managing your Australian expat superannuation whilst you are an expat
Australian Expat Superannuation Contribution Rules
Australian expats may be eligible to claim personal super contributions as a tax deduction if they are considered an eligible person as defined in s290-160 of ITAA97. One of the key requirements is that the member earns less than 10%# of their income from eligible employment in the year the contribution is made.
For Australian expats, income attributable to employment outside Australia is non-assessable and not counted in this ‘10% test’. As such, a non-resident with Australian-sourced income such as rental property income may find it beneficial to claim a tax deduction on personal super contributions.
Note: A Australian expat’s income from interest, dividends and royalties is subject to withholding tax, is excluded from assessable income and cannot be offset by claiming a tax deduction.
# Legislation has now passed to abolish the 10% employment income test from 1 July 2017.
Accessing Your Australian Expat Superannuation as a Non-Resident
If a Australian expat satisfies a condition of release, they can commence a super pension and the tax treatment of the income payments will depend on whether or not they are a resident of a country that has a Double Tax Agreement (DTA) with Australia.
DTAs attempt to prevent double taxation by allocating taxing rights over income classes covered under the agreement. If both the country of residence and Australia (the source country) tax an amount of income, the DTA requires the country of residence to grant a credit against its tax for the tax paid in Australia.
If a DTA does not apply, then the pension income is included as assessable income in Australia if the member is under the age of 60 or comes from an untaxed source. The member may also be entitled to the 15% tax offset (or 10% tax offset for income payments from an untaxed source).
If there is a DTA, then the pension income will generally only be taxable in the country of residence and no PAYG tax is withheld in Australia.
There is a difference in the DTA agreement with New Zealand whereby pensions paid from Australia to a tax resident of New Zealand who is over age 60 will have the tax-free status of the pension recognised and no tax will be levied in New Zealand. This is the only country to state that if the pension is exempt in the home country it will be exempt in the other.
Interested in retiring overseas and using your superannuation to fund your retirement? Make sure you read our Expats Guide to Retiring Overseas and Withdrawing Superannuation.
Contact Atlas Wealth Management to talk to an adviser about taking control of your superannuation.
9 Ways We Can Help
General Advice Disclaimer
The information provided on this website has been provided as general advice only. We have not considered your financial circumstances, needs or objectives and you should seek the assistance of your Atlas Wealth Management Authorised Representative before you make any decision regarding any products mentioned in this communication. Whilst all care has been taken in the preparation of this material, no warranty is given in respect of the information provided and accordingly neither Atlas Wealth Management nor its related entities, employees or agents shall be liable on any ground whatsoever with respect to decisions or actions taken as a result of you acting upon such information.