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Qrops hit by Australian tax change

The Australian government has abolished the foreign investment fund regime, which was one of the main arguments advisers would use when recommending Qrops transfers.

Previously, if a person emigrated to Australia but kept their pension in a retirement vehicle that was classified as a Fif, any fund growth would be taxed as much as 45 per cent.

But the Australian government has now passed legislation to scrap this tax.

Montfort International managing director Geraint Davies says the advice options have become far more difficult to call as a result.

He says: “The foreign investment fund legislation taxed the fund as it grew. This change means that all the reasons to move a pension to Australia to avoid tax have gone. It is now more of an advice and currency issue than a tax issue. No adviser should recommend a transfer unless they know the person is going to be in Australia for the long run and that the timing of the exchange rate is good.”

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