Managing Director of Montfort International Geraint Davies comments on how Australia has gone the UK way when it comes to superannuation:
“Today, Scott Morrison (the Australian Treasurer), delivered the long-awaited “Hit Superannuation Budget” speech. Widely predicted changes to superannuation have resulted – but these are tougher than expected. Australia has gone UK way – but have gone for hitting contributions and the amount you can get out.
“Now more than ever is it essential to take expert advice. If you have not already checked out our website – please do so and see what skills and experience we can provide to our clients. We believe in the need for highlighting the true complexity to UK expats and Australian residents as well as Australians working in the UK. But Australian advisers don’t discuss other options outside Australia maybe because they don’t get paid – from now on they may just have to!
“Previously, you would have been able to transfer a maximum of $540,000 in a 3 year period to an Aussie scheme. This equated to 6 x Concessional tax Component. (This has been reduced from $30,000 to A$25,000 – sounds like the UK all over again as and from 01 July 2017). However there has been an immediate introduction of a A$500,000 lifetime cap.
“The A$540,000 allowed one to move tranches of overseas retirement monies over a number of years into Australia – albeit with a possible and significant tax liability.
“Mr Morrison today announced there would be a ‘lifetime’ non-concessional cap of $500,000 to replace the above and as mentioned above it will take immediate effect. At this early stage it is still unclear whether the lifetime limit extends to transfers from overseas schemes. If this turns out to be the case and you transfer an amount higher than $500,000 you could be taxed up to 49% on the excess.
“We are working on possible solutions for the above. This would seem to impact on those who hold UK Pension Benefits that exceed or are near the amount of $500,000/£250,000, however such are the changes announced that we at Montfort believe those who have smaller sums need to take expert advice as well.”