Back in July 2015, when approximately 1,500 Super funds were removed from the HMRC QROPS list, many thought it was the end of QROPS transfers in Australia.
However, some advisers in Australia, whether rightly or wrongly, recommended that their clients transfer their UK pension into a QROPS based in Gibraltar. This was then halted by the introduction of the Overseas Transfer Charge in March 2017, which meant there was a 25% tax charge on transfers to QROPS that were not based in the same country as the customer.
The Gibraltar QROPS rules allow a member to access their fund at age 55, and are able to take up to 30% of the fund as a tax free lump sum. However, the remainder of the fund must be used to provide and income for life and withdrawals rates are set in line with the UK GAD rates. The income payments from the fund are also subject to 2.5% income tax at source and Gibraltar does not have any double taxation agreements, meaning this income would also be taxable in Australia.
The good news is that there is now a retail Superannuation fund on the ROPS list so these individuals holding a QROPS in Gibraltar, can transfer their pension to the Australian Expatriate Superannuation Fund (AESF), provided they’re aged 55 or over.
If the transfer to Gibraltar was completed before March 2017, they are also able to make an onwards transfer from Gibraltar into New Zealand without the Overseas Transfer Charge applying or any age limit.
An Australian resident holding a QROPS in New Zealand makes financial sense if that QROPS is a foreign investment zero rate PIE. This is because non-NZ residents can benefit from a 0% Prescribed Investor Rate meaning there is no tax on growth, and payments out the fund are not taxable in Australia or New Zealand. There is also no contribution limits in New Zealand.
In any case, an Australian resident holding a QROPS in Gibraltar, should seriously consider moving this closer to home in either the Australian Expatriate Superannuation Fund or the New Zealand Expat Superannuation Fund.
Please speak to us for more information on these Funds and any technicalities around the transfers.