Transferring your Retirement Savings between Australia and New Zealand – If you’re planning to move back across the Tasman Sea as a returning Australian expat from New Zealand, or, if you’ve spent time in Australia and returning to New Zealand, you may have thought about transferring your retirement savings from one country to the other.
In this article, we highlight what you should know before you begin the process, and look at the Trans-Tasman Retirement Savings Portability scheme, which sets out the rules around the portability of Australian super funds and New Zealand KiwiSavers.
Scenario 1 – Transferring from New Zealand to Australia
Under the Trans-Tasman Retirement Savings Portability scheme, if you plan to move permanently or indefinitely to Australia, you’re able to transfer your retirement savings from a KiwiSaver scheme into an APRA regulated Australian super fund, permitting you have an Australian Tax File Number (TFN).
Currently the rules do not permit a transfer to a Self-managed super fund (SMSF).
Additional rules around access to your NZ super
Once your KiwiSaver funds are transferred to your Australian super fund, they are generally subject to Australia’s superannuation rules.
There is however a condition around the New Zealand-sourced component of your super fund, in that this part cannot be accessed until you’ve reached New Zealand’s retirement age (currently 65).
The Australian sourced component on the other hand can still be accessed as early as 60, so long as you have retired or met another valid condition of release.
Tax implications to transfer and withdraw funds
A transfer from a New Zealand KiwiSaver scheme to an Australian super fund is not taxed.
There are also no implications to withdraw from your super account once you’ve met a condition of release.
Something to consider is that should you become a non-resident for tax purposes in New Zealand, you could be taxed at a rate of up to 28% on the investment earnings in your KiwiSaver each year.
In contrast, the investments earnings on funds held in an Australian super fund are subject to a maximum tax rate of 15%, and 10% on long term capital gains.
How much can I transfer?
A transfer from a KiwiSaver scheme into Australian super is treated as a personal non-concessional contribution (NCC), and therefore the maximum amount you can transfer depends on your individual NCC cap (limit).
From 1 July 2022, this is $110,000, or, if you’re under age 75, it is $330,000 when utilizing the bring forward arrangements, where you can “bring forward” the cap space from two future financial years into the current financial year.
When determining your NCC cap, you’ll need to account for any other personal super contributions you may have made to super in the financial year you intend on transferring, as this will reduce the maximum amount you can transfer.
Moreover, where your total super balance is greater than $1.48M, this will also impact on your NCC cap.
If you exceed your NCC cap, you will be liable for excess contributions tax, which could be as high as 47% on the amount in excess of your NCC cap.
You must transfer the entire balance of your KiwiSaver when you transfer to an Australian super fund.
If your balance is more than the transfer limit, you will be unable to transfer your savings.
Scenario 2 – Transferring from Australia to New Zealand
If you’re planning to move permanently or indefinitely from Australia to New Zealand, you may be able to transfer your Australian super retirement savings into an eligible KiwiSaver scheme.
Additional rules around access to your Australian super
To transfer retirement savings from your Australian super fund to a KiwiSaver scheme, you must have permanently emigrated to New Zealand.
You also need to sign a statutory declaration stating this is the case, and provide proof of residence at an address in New Zealand
Once your Australian super fund savings are transferred to your KiwiSaver scheme, they are generally subject to New Zealand’s retirement savings rules.
However, as was the case in the reverse scenario above, special rules apply to the money transferred from your Australian super fund.
Generally, the Australian super fund savings transferred can’t be used to purchase your first home or be moved to a third country.
They can however be access at the time of attaining age 60 and retiring, as is the case in Australia.
Tax implications to transfer and withdraw funds
A transfer from a participating Australian super fund to a New Zealand KiwiSaver scheme is not taxed.
It’s also tax free to withdraw funds from your KiwiSaver scheme once you are legally allowed to access them.
How much can I transfer?
Unlike the reverse scenario discussed above, there are no limits on how much you can transfer from an Australian super fund to a KiwiSaver scheme.
You must however transfer the whole balance of your Australian fund.
Retirement Savings – Australia or NZ?
The key takeaway from the above discussion should be that planning ahead before you begin transferring retirement savings between either system is critical.
Particularly if you are moving funds back to Australia, as the tax implications in that scenario can be quite punitive in the absence of foresight.
Cross-border tax planning can be complicated, and you may want to contact us if you’re unsure about your situation.