NZ Tweaks 15 Percent Superannuation Tax Option

By ExpatBriefing.com Editorial 24 February, 2014

Changes to New Zealand law will provide greater choice to individuals who decide to transfer their foreign superannuation before April 1, 2014.

Revenue Minister Todd McClay has introduced the necessary amendments to the Taxation (Annual Rates, Foreign Superannuation, and Remedial Matters) Bill. The original legislation included a "15 percent option," which enabled those who made a lump-sum withdrawal or a transfer to another superannuation scheme (or applied for a withdrawal) between January 1, 2000, and March 31, 2014, but did not comply with their tax obligations at that time, to pay a tax of only 15 percent of the lump sum amount. This, for example, would entitle an individual with a marginal tax rate of 33 percent to effectively pay just under 5 percent tax on their transfer or withdrawal.

The latest change extend the option's availability to persons whose funds are not transferred out of New Zealand by April 1, 2014, but can prove they have lodged an application before that date.

McClay said: "This amendment is about providing foreign superannuation holders with extra flexibility when it comes to complying with their tax obligations."

At the same time, McClay has asked the Inland Revenue Department "to clear up a few common myths relating to the tax treatment of foreign superannuation." These include the misconception that foreign superannuation holders may face tax of up to 100 percent on their pension, a claim that McClay says is entirely untrue.

Further clarification of the new regulations will be available on the Department's website.

Tags: Individuals | Tax | Investment | Pensions | Revenue Guidance | Law | Employees | Retirement | Tax Authority | Legislation | Tax Rates | New Zealand | Revenue Statistics | Tax Reform | Regulation | Expats |

 





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