New Zealanders who live and work overseas for some time may be required to contribute to a superannuation scheme in the foreign country. Upon their return to New Zealand, they may make a withdrawal from the scheme or transfer it. This may result in New Zealand income tax consequences as the New Zealand tax resident is taxed on their worldwide income.
Overseas Superannuation/ Probate & Pension
Many New Zealand taxpayers are unaware they may have a tax liability in New Zealand when they transfer or withdraw from their superannuation scheme which had already been taxed in the country of source (i.e. overseas country).
Taxation On Overseas Superannuation Scheme Income
Historically, tax compliance on withdrawal and transfers from foreign superannuation schemes have been poor because of the complex rules, so from 1 April 2014 new laws have been introduced. Since then, lump sum withdrawals and transfers from foreign superannuation schemes are generally subject to either the foreign investment fund rules or the foreign superannuation withdrawal rules. Regular pension payments are taxed under another set of rules.
Although these rules have made it easier for taxpayers to comply with tax rules, the tax treatment of superannuation schemes is at times still complex. Tax residency position and determination of the legal nature of the superannuation scheme are the starting point. Relevant documentation should be sought from the superannuation scheme provider.
The income tax treatment of withdrawals and payments from foreign superannuation schemes often comes down to the specific facts, including the nature of the scheme and whether the superannuation interest was acquired while the person was a New Zealand tax resident or a non-New Zealand tax resident.
If you would like to know more about International & Cross Border Tax, click here.
Withdrawn from overseas superannuation scheme or received periodic pension payment?
If you need help with determining the income tax on any of the above situations, get in touch with our team, who can explain the rules and regulations of the foreign superannuation scheme and offer support with anything else you need!
Please refer to our people for more information on who we are, our experience and how we can help.
We offer a no obligation 30min free consultation where we can discuss
- Your overseas superannuation scheme or pension payment;
- highlight issues and opportunities; and
- how we can add value and assist.