Individuals looking to take advantage of the tax treatment applied to a lump sum payment from a foreign super fund must acknowledge the practical timeline often involved with the process, the director of an accounting firm has said.
“If it’s a foreign super fund [involved] and a lump sum payment [is made] to the individual within six months of the date of residency, or [the amount] might get transferred to a super fund in Australia [also] within six months of residency, then there is no tax payable on that transfer,” Cooper Partners head of SMSF and succession Jemma Sanderson noted.
“So that is a really, really good outcome.”
However, Sanderson pointed out advisers and their SMSF clients must be conscious of the transfer process as to whether or not it will satisfy the required six-month deadline from the original date of Australian residency.
“In my experience in dealing with the international schemes, to try and accomplish a payment within six months – it’s a real challenge,” she revealed.
“They’re used to their own rules on their jurisdictions and dealing with their own residents. So having to deal with a non-resident and how that interacts with double tax agreements and [such] things and how that flows through, [makes] trying to achieve something like this within that six-month timeframe is a real challenge.”
To this end, she shared a situation she recently experienced in regard to this type of action.
“We had been dealing with a UK adviser on getting some money into Australia and it took them 12 months just to get an authority on the file with the defined benefit scheme in the UK [allowing] them to actually even [access] information from that scheme – 12 months,” she said.
“[It’s] because they wouldn’t respond to emails, they don’t have a phone number you can call to speak to a real person, so there are real challenges with trying to accomplish these things within the timeframes.”
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