Personal finance and KiwiSaver columnist at the NZ Herald

Helen Twose: Seek advice on bringing savings home

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Consider all the options and various tax laws before sending any money back to KiwiSaver scheme in NZ

From July 1, 2013, if you want to bring your Australian super savings to NZ you must transfer it to a KiwiSaver scheme. Photo / Thinkstock
From July 1, 2013, if you want to bring your Australian super savings to NZ you must transfer it to a KiwiSaver scheme. Photo / Thinkstock

Q: I have lived out of New Zealand since 1989, but am planning to finally come home to live in the next six to 12 months.

I have Australian super and two UK pensions from more than 10 years in both countries.

Am I best to get them all transferred to KiwiSaver, or would I be better to look at other options?

If KiwiSaver is the right choice, is there a limit to how many pensions I can transfer from overseas or a maximum amount?

A: From July 1, 2013 if you want to bring your Australian super savings to New Zealand you must transfer it into a KiwiSaver scheme.

There is no limit on how many Australian super plans you can transfer into your KiwiSaver scheme.

However, you may want to consider "rolling them over" into one before you transfer.

Please note: you can only have one KiwiSaver scheme.

UK pensions must be transferred into what's known as QROPS-approved superannuation funds, or a KiwiSaver scheme that has applied for and become a QROPS scheme.

While there are some obvious benefits from transferring your money to New Zealand, such as the ability to keep track of all your retirement savings and gain more control of your investments, there are other implications you must consider before making a transfer decision.

We strongly recommend that you consult an authorised financial adviser and a tax specialist before making a decision to transfer your Australian super savings and UK pensions as the tax regimes between the countries differ and this may impact on your decision.

If you are bringing Australian super savings to New Zealand, the following rules will apply to the principal sum of your Australian super savings which are being transferred in to your KiwiSaver account:

• If you retire you may access your Australian super savings at age 60.

• The transferred amount will not go towards qualifying for KiwiSaver member tax credits.

• You will not be able to withdraw these savings as a first home withdrawal or use them to count towards qualifying for the deposit subsidy.

• You will not be able to transfer these savings to a third country.

• The transferred amount will be treated as being exempt from tax at the point of exit or entry under these portability arrangements.

- Martin Lewington, Mercer New Zealand head.

Q: A few months ago I joined KiwiSaver as a self-employed person with the intention of paying the minimum amount in June.

At the time I was taking a small drawing each week from my company for about 18 months as directed by our accountant.

However, our accountant recently advised I should stop taking a drawing and be on wages instead from now on, so I cancelled my drawing and started being paid on wages this week.

I am not sure how this will work out now as I signed up to KiwiSaver as self-employed, but now I am "employed" (by my own company).

Can I still make a lump sum contribution each year or am I forced to pay weekly through my wages and is my own company also forced to top up my KiwiSaver?

Business cashflow is a bit tight, so I'd prefer not to top it up if possible at this time.

A: You should contact the IRD to discuss your options. In general, when you move to paying PAYE as a KiwiSaver member you fall into the automatic employee contributions of 3 per cent minimum.

As you are effectively your own employer as well, you will also need to contribute 3 per cent minimum as an employer - your total contributions as your own employee/employer will be 6 per cent.

When you are treated as an employee and paying regular salary contributions you still have the option of making lump sum contributions on top of your automatic payments.

You can take a contributions holiday as an employee (if you have been a member for 12 months or more, or an early contributions holiday if you have been a member for 12 months of less) which can halt the employee and thus the employer regular contributions.

You would need to contact the IRD directly to set up a contributions holiday.

- Sarah Mitchell, Milford Asset Management retail product manager.

Q: When withdrawing from KiwiSaver for a first home, I know you can take out your contributions and your employer's.

Does this also include the member tax credits that you receive, and also the investment earnings?

A: Your first home withdrawal can be made up of your contributions plus contributions from your employer plus any investment earnings achieved by your KiwiSaver savings.

You are able to withdraw all or part of this accumulated amount.

You will not, however, be able to withdraw the Government's $1,000 kick-start contribution or member tax credits you have received.

- Martin Lewington, Mercer New Zealand head.

• 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

To have your KiwiSaver questions answered by the NZ Herald's panel of industry players email Helen Twose.

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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.

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