These days, there is often confusion among Australian ex-pats living worldwide about the fate of their super when they depart from Australia, requiring guidance from SMSF accountants.
Generally speaking, when a resident becomes an ex-pat, there will be no impact on their Australian super – the monies can remain with their fund indefinitely. However, should the ex-pat also be a trustee of a self-managed super fund (SMSF), care must be taken to ensure their move does not make the fund become a non-complying fund.
Temporary residents departing Australia
Temporary residents who have worked and earned super during their stay on a temporary visa may apply for early release of their super as a Departing Australia Superannuation Payment (DASP). There is a 6-month period from the date of departure or expiry of the visa in which the claim can be submitted else. The super monies will be transferred to the Australian Taxation Office as unclaimed super money.
Permanent residents departing Australia
Australian citizens and permanent residents of Australia who have super balances must generally leave these monies in Australia, even if they are departing to be a resident in a foreign country. They continue to receive the same tax concessions, and the same rules apply to their super monies as if they were still a resident, including the following:
- Income tax rates of a maximum of 15% in the accumulation phase and nil in the pension phase (generally limited to $1.6m in pension)
- contribution rules, such as the work test and contribution caps, remain unchanged and continue to apply for both residents and non-residents, except SMSFs (see below)
- the rules for withdrawal of super also remain unchanged for both residents and non-residents – access to super can be when a member reaches their preservation age and retires, turns age 65, or under the Transition to Retirement rules whilst continuing to work
Please note any income stream payments must be made to an Australian bank account.
Furthermore, should a non-resident hold life insurance within their super fund, it would be prudent to check if their departure will impact the validity of their policy.
Permanent residents departing Australia to New Zealand
Permanent residents of Australia moving to New Zealand can either leave their super in Australia or transfer it to a New Zealand KiwiSaver scheme from a participating Australian super fund under the Trans-Tasman Retirement Savings Portability Scheme for Individuals.
Members of SMSFs departing Australia
SMSF members departing Australia permanently or for an extended period may significantly impact the fund. Careful consideration must be given to the fund’s ability to accept contributions, ongoing compliance and eligibility to receive tax concessions as a complying Australian super fund.
As each fund is unique in its individual circumstances, it would be prudent to seek specific advice to ensure a member’s permanent departure will not negatively impact the fund.
Conclusion
When a resident of Australia permanently leaves the country to take up residency in a foreign country, generally, the rules surrounding accessing super remain unchanged. However, there may be limited circumstances in which one can withdraw their super when they depart. As such, it would be prudent for members to check with all their super funds and inform them of their plans before departure.
Kreston Stanley Williamson Team
*Correct as of December 2017
*Disclaimer – this article has been produced by Kreston Stanley Williamson as a service to its clients and associates. The information contained in the article is of general comment only and is not intended to be advice on any particular matter. Before acting on any areas in this article, you must seek advice about your circumstances. Liability is limited by a scheme approved under professional standards legislation.
