Personal finance and KiwiSaver columnist at the NZ Herald

Kiwisaver: Super from Oz a movable feast - mostly

Kiwi's coming home from Australia can move their super to a KiwiSaver scheme, but some features excluded. Photo / AP
Kiwi's coming home from Australia can move their super to a KiwiSaver scheme, but some features excluded. Photo / AP

Our daughter is returning to New Zealand from Australia this year - permanently she says! She has lived and worked in Sydney for three and a half years and has paid compulsory superannuation contributions during all that period.

I understand that she is allowed to transfer these across to her New Zealand KiwiSaver account (she has been a member of the scheme since it started).

It's likely she will wish to access her KiwiSaver contributions to buy her first house when she returns.

I was interested to read of the implications of using KiwiSaver if it includes transferred contributions from another country (in your article it was Britain).

I wondered if the same tax implications would apply to Australian super contributions transferred to NZ KiwiSaver?

In other words, would this also be classified as an "unauthorised payment" and incur a tax liability in Australia after she returns to New Zealand?

Migration from Australia was up 31 per cent last year, with 19,500 permanent and long-term arrivals in 2013, so your daughter is in good company.

Martin Lewington, Mercer's New Zealand managing director, has the lowdown on transferring Australian superannuation schemes back to New Zealand:

"From July 1, 2013, New Zealanders who worked in Australia can move their superannuation from an Australian complying superannuation scheme to a KiwiSaver scheme.

"However, as well as the tax implications that can arise, there are other things your daughter needs to be aware of. First, your daughter must be permanently returning to New Zealand.

"From what you say, it sounds like she is, so she will be able to transfer her Australian super into her KiwiSaver account.

"The transferred amount will be treated as being exempt from tax when it is transferred to KiwiSaver under the transtasman portability arrangements, but your daughter should consider the implications of tax treatment on investment income, which differs between Australia and New Zealand.

"Under the transtasman arrangements she will not be able to withdraw her Australian-sourced contributions transferred to a KiwiSaver scheme to purchase her first home or use them to count towards qualifying for the first home deposit subsidy.

"This transferred amount must remain in her KiwiSaver account until she retires and turns 60, or when she retires any time after that.

"All is not lost, however, with the first home withdrawal option.

"Because your daughter joined KiwiSaver more than three years ago, she will be able to access her other KiwiSaver savings as a first-home withdrawal.

"Assuming she was making contributions into her KiwiSaver scheme prior to moving to Australia, she will be able to access her own contributions, contributions made by her New Zealand employer and any accumulated investment income she has earned since she commenced as a member.

"She will not be able to access the $1000 kick-start received during her first year of membership and any member tax credits she has received during her KiwiSaver membership," says Lewington.

Going back the other way?

It's possible to transfer KiwiSaver funds, including the $1000 kick-start and annual member tax credits, into an Australian Prudential Regulation Authority scheme if you permanently migrate to Australia.

This wasn't always the case, but the 2013 rule changes also mean it is no longer possible to cash in your KiwiSaver funds, minus the government sweeteners, 12 months after permanently migrating to Australia.

That option is available if you are settling in any other country.

Transferring your retirement nest egg between Australia and New Zealand is completely optional, but if you do decide to relocate your savings you have to move the whole lot.

Disclaimer: Information provided is stated accurately to the best of the respondent's knowledge at the time of publication. It is general in nature and should not be construed, or relied on, as a recommendation to invest in a particular financial product or class of financial product. Readers should seek independent financial advice specific to their situation before making an investment decision.

- NZ Herald

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Personal finance and KiwiSaver columnist at the NZ Herald

Helen Twose is a freelance business journalist who writes regularly about KiwiSaver and entrepreneurial companies. She has written for the Business Herald since 2006, covering the telecommunications sector, but has more recently focused on personal finance and profiling successful businesses.

Read more by Helen Twose

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