Good news for people moving between Australia and New Zealand; soon you’ll be able to transfer your superannuation benefits and New Zealand KiwiSaver retirement savings between the two countries. KiwiSaver is New Zealand retirement savings scheme, equivalent to superannuation in Australia. On 18 September 2012, the Australian government released a draft legislation to establish a trans-Tasman retirement savings portability scheme and if this is passed by the parliament, it will take effect from 1 July 2013.
The legislation allows superannuation benefits to be rolled over to New Zealand KiwiSaver scheme and KiwiSaver can be rolled over to superannuation funds in Australia. This means, New Zealanders who move to Australia will be able to consolidate their NZ retirement savings with any Australian superannuation funds. Similarly, Australians moving to NZ or New Zealanders returning home will be able to consolidate their superannuation with their NZ retirement savings.
Australians and New Zealanders are able to live and work in either country freely. New Zealanders working in Australia are entitled to receive superannuation guarantee (9%) from their employers. Currently, Australians and New Zealanders working in Australia cannot take their superannuation with them when they leave Australia permanent. They will have to wait until they reach their respective preservation age.
Details of portability of superannuation between Australia and New Zealand:
- individuals may transfer their retirement savings between an Australian complying fund and a New Zealand KiwiSaver scheme;
- the transfer of the retirement savings is voluntary for members. It is not compulsory for individuals to take their retirement benefits when they leave the country;
- it is also voluntary for both superannuation fund and KiwiSaver to accept the transfer. For example, if your current superannuation fund does not accept the transfer from a KiwiSaver scheme because they do not provide this service, you’ll have to find one that does;
- the transferred benefits must be separated from other benefits or at least easily identifiable within an account set up in the host country as they have different set of rules;
- the transfer of retirement savings is generally subject to the rules of the host country, with some exceptions.
Australian superannuation benefits transferred to a New Zealand KiwiSaver scheme:
- superannuation benefits cannot be withdrawn to buy a first home;
- superannuation benefits can only be accessed when an individual has reached the aged of 60 and retired;
- superannuation benefits cannot be transferred to a third country; and
- superannuation benefits are not taxed when withdrawn from the Australian superannuation fund.
New Zealand KiwiSaver benefits transferred to an Australian Superannuation fund:
- KiwiSaver benefits can only be transferred a complying superannuation fund in Australia;
- KiwiSaver benefits cannot be transferred to or held in a self-managed super fund;
- KiwiSaver benefits cannot be transferred to a third country;
- KiwiSaver benefits can only be accessed when an individual has reached the age of 65 (NZ retirement age);
- KiwiSaver benefits are treated as a personal contribution (non-concessional) and subject to a non-concessional cap on entry into a superannuation fund in Australia. The amount transferred forms part of the tax-free component which means it will not be taxed on entry or withdrawal;
- the amount transferred into an Australian superannuation fund cannot be claimed as a tax deduction by the member; and
- though the amount transferred is treated as a personal contribution but it is not an eligible personal contribution for the purposes of receiving the Government co-contribution.
I welcome any comments or questions you may have.