Michael Abbott

Dear HMRC, To put my question “up front”: Given HMRC’s “adapted” understanding of “lump sums”, how will non-periodic lump sum payments from Australian superannuation be treated for tax purposes in the UK if the recipient is tax resident in the UK? On the issue of UK taxation of Australian superannuation: I understand the UK tax treatment of regular periodic income from Australian pensions paid to someone who is tax resident in the UK, including those from Australian superannuation. Article 17 of the Australia-UK Double Taxation Convention is very clear – the regular pension payments are taxable only in the UK, even if they are from government service. I comprehend the “adapted understanding” of lump sums HMRC Admin 17 posted “4 days ago” on the Community Forum “UK Tax on Australian Superannuation”. It seems reasonable to infer that, given you have identified them separately, you will tax lump sums differently from regular pension payments. This would be consistent with some of the advice your representatives have posted earlier (see summary at the end). What is still not clear is how these lump sums will be treated for tax purposes in the UK if the recipient is tax resident in the UK. Looking back over comments made by various HMRC representatives on lump sums from Australian superannuation, the position seems to have changed or could be viewed as being contradictory. (As a comment, for people who are not international tax professionals, when steering someone to Double Tax Conventions or HMRC Guidance, it might be helpful to quote the part that is relevant, particularly where a document has no specific reference to the subject in question. I would make the same comment if you are steering a person to a document to show there is no exemption, i.e. state that there is no exemption in the Convention so the income will be taxable in the UK and, to be even more helpful, state how it will be taxed in the UK.) A history of HMRC inputs to the Community Forum relevant to lump sums is: “Two years ago”. HMRC Admin 3 stated “Where a lump sum payment is taken out this would be taxable only in Australia. If a pension was taken instead and monthly amounts paid, this would then be taxable only in the UK as a UK resident.” “About a year ago” HMRC Admin 8 posted: “This would be declared as an overseas lump sum pension payment and foreign tax credit can be claimed on the amount of tax already paid.” “10 months ago” HMRC Admin 17 posted: “Regular pension payments from an Australian fund would be subject to UK income tax only. Lump sum payments would be subject to UK tax but also possibly Australian tax. In this case the UK will give Foreign Tax Credit Relief for tax already paid so tax is not paid twice on the same income.” “5 months ago” HMRC Admin 26 posted a reply indicating treatment as a “Trivial Commutation Lump Sum” “4 months ago” HMRC Admin 20 posted: “However clarification is currently being sought for a definition of a lump sum.” “4 months ago” HMRC Admin 19 posted: “As mentioned previously if you take your Australian pension then under article 17 of the double taxation agreement the UK can tax this. If the pension you take is classed as a Trivial Commutation Lump Sum then Australia have the right to tax it and it will not be taxed in the UK.” “Two months ago” someone identified as “Tom-M” made a post that actually looks like it came from HMRC, as it is addressed to a Tom-M and contains text similar to that posted 4 days ago by HMRC Admin 17. “About a month ago” HMRC Admin 24 posted: “If the lump sum has been paid during a period of non residence then this would not need to be reported for income tax purposes to the UK. “4 days ago” HMRC Admin 17 posted information about an “adapted” understanding of lump sums developed in consultation with HMRC’s Tax Treaty Team. However, this did not clearly state how lump sums from Australian superannuation would be taxed in the UK. In addition to this history of specific lump sum comments, “3 days ago” HMRC Admin 19 posted information that could be interpreted that, given superannuation lump sums are not specifically exempted in the Australia-UK Double Taxation Convention, they are taxed in the UK. It would be useful if this were unambiguously stated though. (From what I can see, neither the Double Taxation Convention, nor the Country-Specific Guidance in the Double Taxation Relief Manual to which you have created links, specifically mention lump sums or Australian superannuation. The only instance of “superannuation” that I can see relates to Australian income of UK superannuation funds.) Best Regards

Hi HMRC, I am seeking a slight clarification on HMRC Admin 17’s reply . I assume the statement “This is not dependant on whether the money is brought to the UK.” is designed to apply specifically to Tony Simpson, who a a “UK expat” would presumably be UK domiciled/deemed domiciled and could not claim the remittance basis of taxation. I assume that it still correct that someone not UK domiciled or deemed UK domiciled can avail themselves of the remittance basis and that if they have Australian superannuation assets but do not remit anything from these assets to the UK there will be no UK tax on the superannuation. Are my assumptions correct? Kind regards

I asked a question earlier in relation to Australian superannuation and the remittance basis of taxation. Admin 2 provided a very clear answer. As a follow up: - if I am taxed in the UK using the remittance basis; - my Australian superannuation makes a positive investment return; - I make withdrawals (as an income stream (pension) or lump sum) from my Australian superannuation; - but I do not remit anything from my Australian superannuation to the UK. Will my Australian superannuation be subject to any tax in the UK? Even if it is not taxed in the UK, will my Australian superannuation have any impact on UK taxation of other income that is taxed in the UK? Best Regards

Does the UK remittance basis of taxation apply to investment returns (e.g. dividends, interest, rent and capital gains) from superannuation; as well as to withdrawals (e.g. as an income stream (pension) or lump sum)?