If you are an Australian resident for tax purposes and you have a foreign super fund, you need to know the tax implications for transferring this fund to Australia.
The amounts you transfer from your foreign super fund may be taxable in Australia. But there are also other obligations that may apply specific to the issuing country.
You can transfer the funds in two ways: to another complying Australian super. Or to yourself.
Transfer to your Australian super fund
If you transfer your foreign super fund to your Australian super, it may be counted towards your contribution cap and you will have to pay excess contributions tax on it.
Some conditions apply. This can include your age, the tax year and whether the contributions are concessional or non-concessional.
Remember also that no transfer of a foreign super fund can be accepted if you do not have an Australian Tax File Number (TFN).
Also, your age determines the contribution cap. Any interest earned from the foreign super that you transfer which exceeds the contribution cap for your age will have to be returned.
So you will want to know what your non-concessional contribution cap is before you transfer full sums from your foreign super fund to your Australian super.
If you need further clarification, it is better to consult a tax specialist who is familiar with expat tax returns in Australia to avoid paying additional tax.
Transfer to yourself
If you transfer your foreign super fund to yourself, you may also be liable for the tax.
Any earnings from a lump sum paid to you (or someone else on your behalf) will be included in your assessable income and taxed at a marginal rate. The remainder of the transfer is not subject to income tax.
However, the earnings are calculated based on whether you are an Australian resident for tax purposes at the time to which the earnings apply.
If you want to find out if it relates to you, read Section 305-307 of the Income Tax Assessment Act 1997. If you are living overseas, it may be hard to request the ATO for a private ruling in your case. Therefore, it may be better to seek the help of a tax professional to help you work out your Australian tax return. Contact us at Expat Tax for more guidance.