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Warning of a Qrops minefield after Australia Budget U-turn

Financial migration strategists Montfort International says changes in the Australian Budget have created an advice minefield for qualified recognised overseas pension schemes.

On May 12, the Australian government announced plans to increase the age that citizens can qualify for a government pension to 67 from 65 by 2023.

It did a U-turn on the previously announced increase in non-concessional contributions cap and kept it at $150,000 for 2009-2010.

It also entered into agreement with New Zealand to establish a Trans-Tasman retirement savings portability scheme which Montfort says will have significant implications for Qrops.

The scheme will permit transfers of certain superannuation savings between funds in Australia and approved funds in New Zealand. The date of its introduction is yet to be confirmed.

Although Australia has permitted cashing in of retirement schemes, which is now no longer possible, they have never permitted overseas transfers.

Managing director Geraint Davies says UK individuals moving to live in Australia may be best to route funds through New Zealand or another approved Qrops jurisdiction before moving them onto Australia.

He says: “Previously, individuals moving funds across to Australia were locked in unless they held a temporary visa enabling funds to be released out. This could be relevant to people who move to Australia and decide they want to move back.”

The government announced that foreign investment fund rules will be repealed to ensure a level playing field for investment in offshore managed funds.

Davies says: “Certain UK funds in the past would have been taxed in Australia but we don’t know if they now will be.

“Advice to Antipodean connected clients is now riddled with TCF issues. Due to uncertainty surrounding these chan-ges people may be better not to move funds to Australia or New Zealand in the first instance. They could structure a fund which is not subject to local taxes and we are looking at this.”

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