Q: I have been living in the UK for four years and am not a permanent resident, but plan to stay long term. I would like to get on the property ladder over here and am considering accessing my KiwiSaver, which has about $15,000 in it. Will I lose contributions and be smacked with a tax bill?
The path to the UK is a well-trodden one for Kiwis and many, like you, make the move permanent.
KiwiSaver can be accessed for buying a first home, but one of the eligibility criteria is that the house or land must be in New Zealand, so you cannot make a withdrawal to purchase a property in the UK.
But if you do gain permanent residence in the UK and choose to leave New Zealand permanently, "you could make another withdrawal, called 'permanent emigration'," says Westpac's head of investment products, Nigel Jackson.
"If you permanently emigrate from New Zealand to anywhere other than Australia, after one year you can withdraw funds from your KiwiSaver account," says Jackson.
"All your member tax credits must be repaid to Inland Revenue, and any amounts transferred to your KiwiSaver from an Australian complying superannuation scheme cannot be withdrawn."
This leaves you your contributions, your employer contributions and the $1000 kick-start, if you were eligible.
Jackson says you will be asked to provide evidence to support your permanent emigration withdrawal request.
This could include copies of pages from your passport, plane tickets, utility bills, bank statements or rental agreements, all witnessed and signed by a lawyer, JP or similarly qualified person.
You will also need that person to witness the signing of a statutory declaration on the withdrawal form from your KiwiSaver provider.
What are the tax implications?
"When you make a withdrawal from your KiwiSaver account there will generally be a deduction for any PIE tax owing," says Jackson.
"We recommend you seek UK tax advice regarding your KiwiSaver investment, including whether a permanent emigration withdrawal will mean you'll need to pay UK tax on that money once you receive it."
Having closed your KiwiSaver account, you can rejoin if you return to New Zealand, provided you meet the eligibility criteria.
It's also worth noting you won't have received the member tax credit while you have been living overseas, even if you have made voluntary contributions from the UK.