urbancoyote Posted April 3, 2019 Share Posted April 3, 2019 Hi I'm in my mid 30's and looking at emigrating to Aus near the end of the year. I have the option to put a lump sum in my uk Sipp of around 10k this year and the uk government adds 20% to this amount. This would bump up this pension to about 35k sterling so not that large by any means, so probably not worth transferring to a qrops etc so would keep it in Sipp. In the Uk, you then pay no capital gains or income tax for the life of the pension and you can take a one-off 25% taxfree withdrawal, with the rest taken out as income as you see fit in retirement. My questions are under current rules, if you are an Australian resident for tax purposes 1) Are the funds in your Sipp, taxed in Australia on capital growth and income each financial year, similar to other investments? 2) Are you taxed on the lump sum withdrawal and further income from the pension, at maturation. Given there is 20 years left it hopefully should grow substantially. Just looking for some advice before deciding whether it is worth putting the extra lump sum in the Sipp or not. Many thanks Mack Quote Link to comment Share on other sites More sharing options...
rammygirl Posted April 3, 2019 Share Posted April 3, 2019 You will be taxed in Australia both on any lump sum or on any pension payments. There is a way of minimising this (at least for the lump sum) by providing a valuation when you became an Australian tax resident then that will provide a base. In your case it doesn’t seem worth it if you intend to permanently migrate. There are limited funds to transfer into and all are self managed funds and the transfer will cost you. If you have that cash it may be better invested elsewhere or transferred to Australia and invested or added to any Superannuation scheme here, where the proceeds will be tax free in Australia. I am NOT a financial advisor though and with £10k to invest you might want some professional advice........ Quote Link to comment Share on other sites More sharing options...
urbancoyote Posted April 4, 2019 Author Share Posted April 4, 2019 Thank you rammy girl for your response So I’d pay money on any pension payments I withdrew potentially in uk and then aus, but with some sort of double taxation agreement and therefore best off not doing the lump sum but just withdraw steadily each year. One other question please. if for example I arrive with a 40k sipp and it ends up being a 200k pot for retirement. In the uk as it is in a sipp pension wrapper I would not pay any capital gains tax or dividend income tax on these funds as it was accruing; just at the end point. In Australia would I pay capital gains tax over the years, and income on dividends, as I sold and bought funds/shares within the sipp or would that not be the case as it is in an overseas pension wrapper? many thanks mack Quote Link to comment Share on other sites More sharing options...
rammygirl Posted April 4, 2019 Share Posted April 4, 2019 The overseas wrapper is not recognised in Australia. Same for ISAs. You pay tax on the interest in Aus. Getting too complicated for me beyond that! Quote Link to comment Share on other sites More sharing options...
Ken Posted April 5, 2019 Share Posted April 5, 2019 On 04/04/2019 at 18:35, urbancoyote said: Thank you rammy girl for your response So I’d pay money on any pension payments I withdrew potentially in uk and then aus, but with some sort of double taxation agreement and therefore best off not doing the lump sum but just withdraw steadily each year. One other question please. if for example I arrive with a 40k sipp and it ends up being a 200k pot for retirement. In the uk as it is in a sipp pension wrapper I would not pay any capital gains tax or dividend income tax on these funds as it was accruing; just at the end point. In Australia would I pay capital gains tax over the years, and income on dividends, as I sold and bought funds/shares within the sipp or would that not be the case as it is in an overseas pension wrapper? many thanks mack Because a SIPP is tax free in the UK the double taxation agreement doesn't come in to play. You are only paying tax in Australia so you are not being double taxed. If a SIPP was taxed in the UK then the double taxation agreement would apply and the amount of tax you needed to pay in Australia would be reduced by the amount of tax you had paid in the UK. 1 Quote Link to comment Share on other sites More sharing options...
Marisawright Posted April 5, 2019 Share Posted April 5, 2019 Just to clarify Ken's post. The double taxation agreement does not mean "if the UK has already taxed something, Australia won't tax it too" (or vice versa). It means that if you are living in Australia and you have overseas earnings, Australia will take into account the tax you've already paid in the UK. So, say, (as a fictional example), the UK taxed you $314 on some income. When you complete your Australian tax return, you declare the income. The Australian taxman works out how much tax you're due to pay on that income, then deducts the $314 you've already paid to the UK, and only charges you the balance. 1 Quote Link to comment Share on other sites More sharing options...
Alan Collett Posted April 10, 2019 Share Posted April 10, 2019 Note also that the Treaty gives sole taxing rights to the jurisdiction in respect you are resident in respect of certain types of income, most notably pension income. I recommend the OP considers taking some professional advice on his strategy and tax consequences. Best regards. Quote Link to comment Share on other sites More sharing options...
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