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6 Month Tax Free Window |
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Generally there is no tax payable on pension lump sum transfers if: |
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the pension transfer is completed within 6 months of the individual becoming an Australian Resident |
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the pension is transferred into a ‘Qualifying Recognised Overseas Pension Scheme’ (QROPS) |
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the transfer value is under the non-concessional caps imposed by Australian superannuation law |
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Transferring a pension can take 3-4 months causing the transfer to be completed after the 6 month window, or you may have already been resident for over 6 months. In this case, consistent with the Australian Foreign Investment Fund (FIF) rules, tax will be payable on any increase in the fund from the day you became an Australian resident to the day the fund was transferred.
E.g. you became a resident of Australia on the 1st of July 2004 and at that time the transfer value of your UK Pension was $50,000. The fund was transferred on the 10th of January 2005 (over 6 months) and the transfer value was $54,000. You will be taxed on the $4,000 increase.
This growth will either be taxed at your marginal tax rate, or at the concessional rate of 15% ($600 in this case). Depending on your personal tax circumstances, either option could be suitable. Please read our tax section for further details.
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