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Playing the transfer game by Aussie rules

Responding to James Salmon’s article headlined, Tax wizardry of Oz loses magic for expats, and doing so from a position of some authority (our firm designed the first Australian product to accept UK pension transfers and has been financially guiding those with an Australian or New Zealand connection since the mid-1990s), we would like to make the following points.

Mr Salmon is restricted in the number of words he writes. However, I would like to illustrate how serious an issue this is, especially in the era of treating customers fairly.

Quoting Mr Salmon: “If people emigrate and leave the money in a UK personal pension, they will pay Australian tax on the growth in the fund each year until it is transferred or they start taking benefits.” This is the case in some situations but not in all situations. Depending on the visa status of the migrant or even the type of pension, a migrant’s funds could grow in the UK without Australian taxation implications.

Without a demanding knowledge of this topic, this is clearly an area of some concern, as a migrant’s pension funds, with the incorrect advice, could be located in an inappropriate environment.

With regards to the rule change in Australia and the maximum contribution limit (set at A$150,000 a year) to an Australian superannuation scheme, this is effective now.

However, there is currently a larger transitional amount that can be contributed or transferred to an Australian scheme up to July 1. After July 1, it is still possible to contribute more than A$150,000 (around £60,000) in one tax year providing it is managed properly – another advice issue.

With other factors, such as the fluctuating exchange rate and UK pension options pre-departure, this is no longer as straightforward as asking: “Should my client transfer or not?”

I note that 1.3 million UK citizens live in Australia and there are 250,000 in New Zealand. Add to this the 150,000 Aussies and Kiwis living in UK who receive UK financial advice and will one day return to their home countries and we close in on 1.75 million. That equates to a large number of people who we could advise, have advised and will advise.

Are we treating these people fairly if we try and give advice to a group who need specialist advice? Do not tell me you have not got someone in your database on whom this impacts because, with these numbers, it is hard to believe.

Geraint Davies,
Managing director,
Montfort International


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