Government confirms transfer of retirement benefits between Australia and NZ

Under new legislation passed by Parliament, Australians and New Zealanders who move across the Tasman will now be able to consolidate retirement savings in their new country of residence.

The change is set to benefit many Australians and New Zealanders in the future; more than 50,000 Kiwis moved to Australia and around 14,000 Aussies relocated to New Zealand in the last year alone.

The new legislation effectively means that individuals relocating across the ditch won’t have to pay fees on accounts in two countries. The new rules also mean that retirement savings will no longer be subject to the different rules and tax treatment of each country which will simplify management and retirement planning greatly.

The transfer of retirement savings will be voluntary for fund members in both countries.

Only benefits from complying Australian superannuation funds and New Zealand KiwiSaver schemes may be transferred and the amounts transferred will generally be subject to the rules of the host country. However, transferred amounts will be separately identifiable within the account in the host country and but earnings on these amounts will be subject to host country rules.

Amounts transferred by New Zealanders to Australian super funds will count towards the non-concessional contribution cap for the year in which the transfer takes place. This means Kiwis with larger account balances may need to transfer benefits progressively over a number of years to avoid breaching the annual cap.

Australians who transfer super benefits to a KiwiSaver account will not be able to withdraw their funds to purchase a first home like some New Zealanders can, but amounts transferred will not be treated as a taxable dividend in a KiwiSaver account in the year of transfer.

The changes are scheduled to take effect from 1 July 2013 and are another step towards establishing a single economic market between Australia and New Zealand.