Foreign Super Tax Amnesty
Foreign Super Tax Amnesty
Extended window for foreign super transfers to take advantage of more favourable tax option
An amendment has been announced today, to foreign superannuation tax changes in theTaxation Bill (Annual Rates, Foreign Superannuation, and Remedial Matters), which extends the opportunity for people to take advantage of a special 15% option on foreign superannuation withdrawals.
From 1 April, new tax rules will apply
to New Zealanders holding foreign superannuation scheme
interests. The Bill also contains an option for members of
foreign superannuation schemes to “square” their tax
liability if they should have been paying tax on income, or
on withdrawals from the scheme, before 31 March 2014 but
have not. This special option limits the taxable amount of
any withdrawals from foreign superannuation schemes between
1 January 2000 and 31 March 2014 to 15% and is intended as
an amnesty of sorts, for previous non-compliance.
15% option will now be available to anyone who has applied
to their foreign superannuation scheme for the release or
transfer of funds to a New Zealand scheme before 1 April,
including where the transfer is not completed by that date.
Prior to this amendment it would have been necessary for the
transfer to have been completed in order for the 15% option
to be available.
“This is a positive
clarification which provides New Zealanders with a great
opportunity to get their foreign superannuation in order and
take advantage of the 15% option.” says
Rebecca Armour, Tax Director and Head of International
Executive Services at KPMG. “ In our
experience, transferring superannuation interests from a
foreign fund to New Zealand can take a long time and this
change means that more people will be able to benefit from
the amnesty on offer.” says Armour.
Armour says that many people are still unaware of the
changes to the tax treatment of foreign superannuation,
which will take effect from 1 April 2014. Under the new
rules, tax will be payable on amounts from foreign
superannuation schemes at the time they are transferred to
New Zealand. The percentage of the transfer that is taxable
increases, based on the amount of time a person has lived in
New Zealand. For example, someone who has lived here for 15
years will be taxed on nearly 50% of their foreign
“For people who have
been living in New Zealand for a long time, they may wish to
consider withdrawing their foreign superannuation to access
the more favourable 15% option.” says Armour.
This latest amendment means that as long as an application
is made to the foreign superannuation scheme to withdraw the
funds by 31 March, the 15% option will be available.
While the Bill has not been enacted yet, it is expected
to become law soon. The tax, under the 15% option, will
need to be paid in the tax return for either the 2013-2014