UK Tax on Australian Superannuation

Hi,
 

Article 17 of the UK/Australia DTA states "ARTICLE 17 Pensions and annuities. 1 Pensions (including government pensions) and annuities paid to a resident of a Contracting State shall be taxable only in that State.  2 The term “annuity” means a stated sum payable periodically to an individual at stated times during life or during a specified or ascertinable period of time under an obligation to make the payments in return for adequate and full consideration in money or money’s worth.".  Paragraph 2 specifies payments made 'periodially', qualify for relief.  Lump sum payments are not mentioned in any way, therefor, they do not qualify for double taxation relief and so the lump sum is taxable in the United Kingdom.  As a resident of Australia, you can claim tax relief on the tax paid in the UK on the lump sum.  The double taxation agreement can be found at : Australia: tax treaties   . Thank you.

Hi Helen Flavell,

The double taxation agreements that the UK has with other countries in the world, all differ from one another in one way or another.  
You don't mention which country. 

Thank you.
 

Hi, I have a similar question to ones already posted on this space. There are a lot of exchanges here, and I apologise if I have missed response that I am after. I am English living and working in Australia, and have Australian Superannuation. I am thinking of moving back to the UK when I retire. I am not sure if this is a permanent move, so would like to keep my Super in Australia just in case. Currently my fund is in the Accumulation phase which is taxed. When I finish work I can move the funds into retirement phase (invested in a mix of growth assets) which is tax free; and it is from this that I will receive a regular payment. I understand that the regular payment is taxed as income. How is growth in the main fund treated? Martyn

Hi,

If you were resident in the UK, growth within the pension would not be taxable, provided that the growth and your payments into the scheme are below your annual allowance each tax year.

You can find guidance here:

PTM053100 - Annual allowance: pension input amounts: valuing for different types of arrangement

Thank you.

A UK tax resident has two Australian Superannuation funds accumulated through working for national and state governments in Australia. The member of these funds has the right to receive lump sum payments and both funds have a benefit value accrued before 6 April 2017. Based on EIM 75550 I understand that when a lump sum is taken from either of these funds, the pre 6 April 2017 proportion of any lump sum can be deducted from the amount the member will declare on the UK tax self assessment. I would like to know: if one of the funds is rolled over to an intermediate scheme (still in accumuation phase in Australia), that a deduction of the original scheme value immediately before 6 April 2017 still applies to the lump sum taken from the intermediate scheme? Thank you

Thank you for your previous replies. Having read EIM 75600 if I and my 2 children are dependents receiving an income from my late husbands portion of the SMSF this is saying the income should be tax free. Please can you confirm this.

Hi Helen Flavell
The guidance you refer to is for UK pensions only.
As you state this is an Australian pension, guidance here should be follwed :
The taxation of pension income
Based on this, under S573, as a dependant, the income is taxable.
Thankyou.
Regards.

Thank you. Reading the guidance it states: However, some types of pension or annuity paid after 5 April 2015 to a dependant, nominee or successor may be tax-free where they are paid from either a: registered pension scheme foreign pension scheme that is an overseas pension scheme or a relevant non-UK scheme (RNUKS). My husband was 45 years when he died and had paid tax on contributions to the SMSF. The guidance suggests that as my children and I are beneficiaries of an overseas pension tax is not paid on the annuity payments. Kind regards Helen

Hi Tax Payer,

This would depend on the criteria outlined on the guidance you refer to at the step 'Application of Step 2'.

If all the conditions are not met, then no.

Thank you.

Hi, My daughter left the UK in 2017 (she was 23) to live and work in Australia. She has dual citizenship, but grew up and went to school and University in the UK. She returned to the UK in 2020 and became a full time student until September 2021. She was employed by an Australian company whilst in Australia and paid Australian tax on her income. Just prior to leaving Australia she was allowed to withdraw money from her superannuation fund under a Covid Relief scheme. She withdrew a tax free lump sum and remitted it to the UK together with savings from her employment during tax years 2020/21 and 2021/22. From reading the literature, it appears that she was temporarily non resident during the period abroad. Should she have declared both the remitted earnings and the superannuation lump free sum on her 2020/21 Tax Return? Is she liable for UK Tax on the superannuation lump sum? If so, during 2020/21 when the amount was paid into her Australian bank account and when she was a full time student, or when it was remitted to the UK ? Does she have to declare the taxed remitted earnings on her 2020/21 and 2021/22 Tax Returns together with the Australian Tax paid? Will there be a penalty for not previously completing a 2020/21 Tax Return? Thanks in advance for your advice.

Hi,

If you qualify for split year then you only report any foreign income for the UK part of the year.

RDRM12000 - Residence: The SRT: Split year treatment

If you do not qualify then you will need to report all your foreign income to the UK.

Tax on foreign income

The guidance at RDRM12150 at GOV.UK will help you work out if split year treatment applies. 

Thank you.

A current UK tax resident has a super fund in Australia and has the choice to take some or all of the fund as a lump sum. HMRC allows the value of the fund as at 5/4/17 to be taken tax free if a lump sum. Can the balance of the fund (growth since 6/4/17) be taken as a taxable income stream each year? I could obtain an answer to this in recent correspondence with HMRC.

My partner worked in Australia for 9 years from 1992 to 2001 and was a contributor to a State Authority Superannuation Scheme (SASS). Resigned in the 2001 and returned to the UK. This year aged 60 is now entitled to withdraw a lump sum (Tax free in Australia) but taxable in the UK as a UK residnet. From what I can ascertain from the UK Government website, HMRC and various other online sources, it would seem there is a possibility of foreign service relief on the portion of the lump sum that has grown over the years, prior to April 6th 2017. It is the calculations I am having problems with in particular the definition of “reckonable service” Query: Was in employment (foreign service) from 1992 to 2001 (not resident in the UK) contributing to SASS. Does this mean the following: The reckonable service was from 1992 – 2017 (length of time a member of the Superannuation Scheme) The reckonable foreign service was from 1992 – 2001 (length of time employed and contributing to the Superannuation Scheme)

Apologies for typo in my previous post 4 days ago. The last sentence should read ‘I could not obtain an answer to my question in recent correspondence with HMRC’ Thanks and hoping for clarification

Hi lamplighter,

How you choose to take the pension is a personal choice and under Article 17 of the double taxation agreement with Australia, will be taxed in the UK.

You may therefore wish to speak to a financial adviser.

Thank you. 

Hi Nigel Giles,

The double taxation agreement between the UK and Australia, refers to pensions at article 17, however, it makes no mention of lumpsums.  

This means there is no relief for trivial commutation lump sum available, so they will be taxable in Australia and the UK.

To avoid double taxation, you can claim a foreign tax credit relief of up to 100% of the tax deducted in Australia in your Self Assessment Tax return. 

Thank you. 
 

Hi lamplighter,

Article 17 of the UK/Australia double taxation agreement cover pensions and annuities.

UK/ Australia Double Taxation Convention

It advises that if you are resident in the UK, then you are taxable in the UK on the pension or annuity paid periodically at stated time over an ascertainable period of time. As there is no relief for a 'trivial commutation lump sum', lump sum payments from an Australian pension are taxable in Australia, but periodic payments are not.

Thank you. 
 

I emigrated to Australia in 1991 and left in 1994. I now have a small Australian Public Service pension which was chrystalized 12 years ago, and which is paid into my Australian bank account. I am now living in UK permenantly though I do retain my Australian Citizenship and Passport. I am a joint UK and Australian citizen - UK from Birth. 1. I have been declaring the pension income and interest on my bank account for UK tax for over 12 years but have not remitted any of it to UK. Have I been paying UK tax unnecessarily? 2. I also pay ~10% witholding tax on the pension in Australia - I'm not sure how to stop it and there is no way I can get credit for it with HMRC. What are my options? Thanks (first post on this thread and I am not sure I have done it properly - sorry if I did it wrongly)

Hi,

As a UK national and resident, you are liable to tax in the UK, arising on all your worldwide income and gains.

Article 17 of the UK / Australia double taxation agreements advises, that Australian pensions, including Australian government pensions paid to the resident of the UK, are taxable only in the UK. You can see information here:

UK/ Australia Double Taxation Convention

 Your Australian pension, should be declared in a Self Assessment tax return.  

You should also contact the Australian tax authorities, to find out how to claim a repayment of any tax paid in Austrlia, as the pensions are not taxable in that country. A foreign tax credit can be claimed in your Self Assessment tax return for foreign tax paid.

Thank you.

A friend (a dual UK/Aus national but originally born in and had worked in the UK) had been resident and working in Australia for over 15 years. For those 15 years he paid tax on his global income in Australia. He had a small sum (only about $15k) in an Australian superannuation fund. In early March 2023 he sold his sole residence in Australia in preparation for returning permanently to the UK and, since he is over 65, put $400k of the proceeds of that sale into his Australian super fund as a safe place to hold the money pending his move to the UK. He moved to the UK a week later in late March 2023. He now (less than 3 months later) wishes to bring that $400k to the UK as a lump sum. Given that he put a post-tax lump sum into the fund only three months for safe keeping and was unaware of the provisions discussed in this forum, will he be liable for UK tax as he brings that $400k into the UK?