KiwiSaver: Choices abound for OZ super funds

You may want to consider tax rates, currency exchange rates and any other benefits when deciding to bring your Australian super money to New Zealand. Photo / NZME.

Being over 60 years old means you can deposit your money anywhere you like, and bring it to NZ tax-free.

For the last four years my husband and I have been working in Western Australia for eight months of each year, with our employers paying into our Australian super funds.
I am 62 and my husband is 67 doing a seniors OE.
We read an article in the Herald that New Zealanders bringing home overseas super money would be taxed at New Zealand tax rates.
We plan on returning permanently at the end of this year.
We understand that New Zealanders can have Australian super funds transferred to a New Zealand KiwiSaver fund.
Is that money tax-free?
So if it is taxed in New Zealand, would we be better to leave that money paid into our Australian bank account and spend it as we desire?

You're right -- Australian super funds can now be transferred into New Zealand KiwiSaver schemes.

For more than a year rules agreed to by the Australian and New Zealand Governments have made it possible to move superannuation savings across the Tasman.

It's not compulsory for providers in either country to accept the funds but KiwiSaver providers are generally on board with the changes and will take transfers from Australian super funds.

But because you are in your 60s, there may be some other options available to you rather than putting your Australian super savings into KiwiSaver.

Joe Bishop, head of retail and marketing at Gareth Morgan Investments, explains:

"As you and your husband are both over the age of 60, you may be entitled to withdraw your funds from your Australian superannuation scheme, depending on the rules of the scheme.

"This means that you could choose to deposit these funds anywhere you like, such as an Australian bank account or a New Zealand bank account, and won't necessarily be restricted to transferring them into a superannuation scheme.

"If you hadn't reached the age where you were eligible to withdraw money from your Australian super scheme, you would only be able to transfer Australian super funds into another Australian super scheme or a KiwiSaver scheme, not into a bank account or another superannuation scheme in New Zealand.

"If he isn't already a KiwiSaver member, your husband won't be able to join as he is over the age of 65, although you can still join.

"You do not need to pay tax on withdrawals from KiwiSaver.

"There are some differences between Australian super schemes and KiwiSaver schemes which may affect the amount you can get when you withdraw your savings.

"Some of the things you may want to consider when deciding to bring your Australian super money to New Zealand are tax rates, currency exchange rates and any other benefits such as guarantees or minimum payments that you may have included with your Australian scheme.

"If you choose to bring your Australian super funds to New Zealand, then those funds will be subject to New Zealand tax rules.

"There have been recent changes to the way foreign superannuation interests are taxed in New Zealand.

"These rules mean that lump sums brought in from overseas superannuation schemes may be subject to tax when they are brought to New Zealand.

"However, these rules do not apply to funds brought across from Australian superannuation schemes.

"Bringing your Australian super money to New Zealand is an important decision.

You may also want to seek independent financial and tax advice before proceeding with the transfer," says Bishop.

*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.

To have your KiwiSaver questions answered by the Herald's panel of industry players email Helen Twose, helentwose@gmail.com. Sorry, but Helen cannot answer all questions, correspond directly with readers, or give financial advice.