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Andrew Williams

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Everything posted by Andrew Williams

  1. Andrew Williams

    Pension advice

    Hi Steve Since you've had no response I will reply, I specialise in this area and could offer a no charge initial consult if you would like. I am based in Adelaide but have many interstate clients so distance not an issue for us. Feel free to email me if you wish to get in touch: Andrew@vistafs.com.au FYI we sponsor the parent site to this one and have done so for over a decade: UK Pensions & Australian Superannuation advice (pomsinoz.com) Regards Andy.
  2. Andrew Williams

    Obtain a UK Pension (Final Salary) Transfer Value

    Hi Lisa Thanks for the post. I will wait until we have done a few cases first so that we are able to make sure our process is as smooth as possible (that's coming from an advice and implementation angle not a product angle as this product/solution has been in existence for 12-18 months already (just new to us)) before I write my post as inevitably it will lead to new enquiries/business. Look out for it on or the sister forums (you could always like our Facebook page as it will also be on there). Thanks Lisa.
  3. I would encourage anyone with a private UK Defined Benefit Pension Scheme (sometimes referred to as a final salary pension) to obtain a transfer value. Values have been increasing steadily over the years and it is believed that they have now perhaps peaked. We are seeing values on average standing around 25x the current annual pension benefits. This means that if you have a UK pension and the current benefit gives you a yearly pension of £10,000 the transfer value could be £250,000. So if you are a deferred member of a Defined Benefit (final salary) UK Pension Scheme and live in Australia we strongly believe that you should be proactive in this area and we (Vista Financial Services) can request the relevant transfer values and information for you. We can then if required provide advice around whether these benefits are best placed where they are OR whether they are going to work better for you in retirement elsewhere we can then if appropriate carry out a transfer for you. Our solutions include being able to transfer to an Australian Super Fund (QROPS) where applicable which is a solution only open to people above age 55 currently (due to HMRC legislation). We are also able to provide advice on transferring into an International SIPP (perhaps as an interim measure if under age 55 until it can be transferred to an Australia Super Fund) where the money can be appropriately invested as advised by us into UK and Australian currency dominated investments (I will expand more on this solution in another post). Please note that government pensions such a NHS and Police Pension cannot be transferred neither can the UK State Pension.
  4. Andrew Williams

    1st Retail Q/ROPS Super Fund on HMRC ROPS list

    Hello MaxV Yes it is. I have recommended them as the Australian QROPS for previous clients to transfer their UK pensions into. Not that I am aware of. There is as I am aware at least two other companies looking to establish Super Funds and have them added to the ROPS list at the moment. However when this will occur is unknown as one of those two companies have been waiting for HMRC to accept their QROPS registration for many months now. Hope this helps. Regards Andy
  5. The first ROPS public offer retail superannuation fund has appeared on the most recent HMRC ROPS list since the de-listing of all Australian retail Super Funds in July 2015. The Super Fund is still only an option for those over the age of 55 but means that for anyone over that age looking to transfer UK Pensions to Australia they can now do so without having to open a Self-Managed Super Fund (SMSF). There will be advantages of this such as the process of transferring pensions will be less time consuming and there will not be the responsibilities involved with that of effectively becoming a Trustee of the SMSF. However there will also be some disadvantages such as, for balances over around $200k - $250k it is likely to be more expensive and certainly more restrictive in terms of investments, I believe there only to be around 20 underlying investment options to choose from. I also understand there to be a further over 55s ROPS Super Fund (public offer) coming very soon however I am not yet sure of details such as costs or investment options. Regards Andy
  6. Andrew Williams

    The Pension Protection Fund

    The Pension Protection Fund (PPF) protects millions of people throughout the UK who belong to defined benefit, eg final salary, pension schemes. If their employers go bust, and their pension scheme can't afford to pay what they promised, the PPF will pay compensation for their lost pensions.
  7. Andrew Williams

    U.K. Pension query

    Hi Epson Yes correct in your thinking regards the UK State Pension. Private Health Cover is personal preference, some believe in it some don't...........I do and have it with Bupa, also if you are a high earner (https://www.ato.gov.au/Individuals/Medicare-levy/Medicare-levy-surcharge/Income-thresholds-and-rates-for-the-Medicare-levy-surcharge/ it typically makes sense to have it otherwise an additional tax is levied. Andy
  8. Andrew Williams

    Recommendations - UK pension

    Hi Mark So is your existing UK Pension a defined benefit or defined contribution scheme..............if defined benefit who is it with? Andy
  9. Andrew Williams

    Recommendations - UK pension

    Hi Kieran Happy new year. No using the bring forward rule means that you are using 3 contribution years up in one hit so the neat transfer would then be year 4, it may be possible to bring in another $300k at this point. The SIPP option with the ability to convert to Aussie dollars at an agreeable future point is certainly something that should be considered. Does your Adviser has experience of UK Pension Transfers to Australia? Depending on how long you have been here (in Australia) partial transfers to Australia from the SIPP (if that is the way you go) may need to be done by creating further SIPPs with sideways transfers beforehand to avoid unnecessary tax charges. KR Andy
  10. Andrew Williams

    Recommendations - UK pension

    Hi Kieran Yes there are contribution limits in place being $100,000 each financial year however a bring forward rule exists (effectively utilising 2 future years allowance) allowing a person to contribute up to $300,000 in one go if under age 65. In addition it also may be possible to transfer any Applicable Fund Earnings (AFE) however great care needs to be given if doing this as there are complex rules surrounding it. Are you Australian based?
  11. Andrew Williams

    Recommendations - UK pension

    Hello Andrew The UK pension transfer landscape has changed dramatically over the last few years with changes to the UK and Australian system. Offshore transfers now very rarely make sense due to a newly introduced UK tax charge of 25% of the pot if a person living in Australia transfers a pension to a country other than Australia. So simply put Australia is now usually the only consideration to transfer a UK pension too however another change fairly recently means that only people over the age of 55 can transfer a UK pension to Australia due to another set of UK rules. Therefore in summary if you are over age 55 then a transfer to Australia may be worth exploring. If you are under age 55 then a transfer to Australia cannot occur at this stage however there may be merit in reviewing your current UK pension arrangements for a number of reasons. I hope this helps Andrew, feel free to ask any further questions you may have. Kind regards Andy
  12. Andrew Williams

    Seeking an Expat Accountant Expert

    Alan has put himself forward already Giles but I can also recommend him to you, Alan is highly regarded and will be able to look after you in this area. Regards Andy
  13. Andrew Williams

    Transferring UK contribution pension to Australia

    Thanks Alan I've actually spoken to Erin before and some people prefer face to face, which is totally understandable.
  14. Financial planning is about protecting your wealth as well as building your wealth. It is easy to think that we won’t get sick or hurt and ignore the need to protect the very thing that generates our wealth, our own health and our ability to work. But if accident or serious illness does occur the impacts can be devastating. It’s worth remembering that no matter how much expert advice you receive or how well you manage your finances there is always a risk that you could suffer an early death or serious illness or injury. Where that leaves you and your loved ones in the future depends on the wealth protection strategy you have in place. Risks you could face in the future may include: Emotional, physical or mental trauma Death or serious illness Loss of income due to temporary or permanent incapacity Damage to your house or other personal assets Theft and/or damage to business assets Public liability and/or professional indemnity risks Your financial plan should include a strategy to minimise risks that could jeopardise both your present and future plans. In simple terms, if you cannot afford to lose something then you should try to protect your exposure. Insurance can provide a cost-effective protection mechanism. This may take a combination of personal, general and health insurance policies. There are many different aspects to insurance and it is best to tailor a package that suits your needs as well as your budget. How the Strategy Works Personal risk insurance protects your wealth accumulation strategy by providing money if you are no longer able to earn an income due to disability, trauma or death. The money received can help with medical bills, loan repayments and living expenses. Many people often underestimate the importance of personal insurance which has led to a problem with underinsurance in Australia. It is important that you consider having enough cover to replace your income and cover expenses so that the personal tragedy does not create financial tragedy. You can apply for insurance to cover you in the event of death, temporary or permanent disability, or trauma (critical illness). Outlined below is a brief outline of types of personal risk insurance. Life Insurance The most common type of cover is life insurance (term life insurance). Life insurance will pay a lump sum to your estate or specific beneficiaries in the event of death or in some cases, terminal illness. The advantage of life insurance is peace of mind that your death will minimise any financial hardship for your loved ones. Life insurance can be used to pay off debts, provide an income for dependents, cover funeral expenses and generally assist in maintaining your family’s lifestyle in the event of your death. With this type of cover, your family would not be burdened by debt and may be protected from selling assets to pay debts or cover living expenses. Total and Permanent Disability Insurance Total and Permanent Disablement (TPD) can prevent you from working and require expensive medical treatment and ongoing care. TPD insurance aims to provide a lump sum if you suffer an illness or injury and you: Are permanently unable to work again or Are unable to care for yourself independently, or Suffer significant and permanent cognitive impairment. TPD insurance pays a lump sum which can be used to pay for medical expenses, ongoing care costs and to meet living expenses for you and your family. The definition of TPD can vary and may include options for a range of occupations, including homemakers. Options that you can choose from include: Any Occupation TPD: The benefit will be paid if you are unlikely to be engaged in any gainful business, profession or occupation to which you are reasonable suited by your education, training or experience. This definition is generally less expensive than an Own Occupation definition but for some people may be harder to meet. Own Occupation TPD: The benefit will be paid if you are unlikely to ever be engaged in your own occupation again. Own Occupation TPD provides a generous definition as it is specific to your occupation and is particularly suitable for specialist occupations. The premiums for this type of definition are more expensive than Any Occupation TPD. You should discuss your circumstances with your financial planner. Trauma Insurance A serious illness or injury can prevent you from working for a period of time and may require expensive medical treatment. Trauma insurance (also known as critical illness, crisis or recovery insurance) aims to provide a lump sum upon the diagnosis of a specified illness or injury such as life threatening cancer, stroke or heart attack. Trauma insurance pays a lump sum which can be used to pay medical expenses and reduce any financial pressure while you focus on recovery. This payment is made regardless of whether you are able to return to work, and is designed to relieve financial pressure at a time when you are under great stress. Child Trauma insurance can be added to your policy to cover a seriously ill or injured child. This provides a lump sum to help you cover medical treatment and eases financial worry for parents who may need to take time off work to provide care. Income Protection Insurance Income Protection insurance aims to minimise the financial impact of sickness or injury by replacing income lost during a prolonged absence from work. A monthly benefit will assist you to meet living expenses and debt repayments. Income Protection policies will usually pay a benefit up to 75% of your gross income (some policies may pay higher) after a waiting period. Payments continue for a set term or until you return to work. Generally premiums for income protection are fully tax deductible. Waiting period: This is the time period that you must be off work before an income benefit is payable. Waiting periods range from 14 days to two years. Generally, the longer the waiting period, the lower the cost of the income protection insurance. Benefit period: Starting at the end of the waiting period, the benefit period is the maximum time the benefit is paid. Options range from two years, five years or until a specified age such as age 65. Types of contracts include: Agreed value: The monthly benefit is agreed at the time of application and will not reduce even if your income decreases after your policy commenced. This option provides certainty and peace of mind on how much income you will receive. If details of your income are provided at the time of application the benefit can be guaranteed so that no further financial assessment is required at the time of claim. Indemnity value: The monthly benefit paid depends on your earnings at the time of a claim rather than at the time of application. If your income at the time of claim is lower than it was when the policy started, the monthly benefit may be reduced accordingly. Details and proof of income will be required at the time of claim. You can generally claim a tax deduction for the premiums paid on an income protection policy to reduce the effective cost but any income payments received are considered taxable income. Business Expense Insurance Business expense insurance can help to keep your business running if you are unable to work due to temporary illness or injury. This may be particularly appropriate for a sole trader. This type of insurance will usually cover up to 100% of your eligible business expenses, for example rent/lease payments, interest costs, accountant’s fees, telephone, electricity, etc. However, not all expenses are covered so you should check the policy wording before taking out a policy. Alternatively, if you run a larger business you may need to consider life, trauma, TPD or income protection insurance to cover ‘key’ employees or your business partners in case they die or become disabled and are unable to work. This type of insurance protects your business in the event of the loss of a person who makes a significant contribution towards the profitability or stability of the business. As an example, ‘key person’ insurance may provide the business with a lump sum that could be used to either hire a temporary replacement, cover costs of training a new staff member or just compensate the business for any reduction to profit. The premiums may be deductible as a business expense depending on the insurance purpose and the proceeds may also be considered taxable income. Premiums Premiums for all types of personal insurance will vary with age, gender and smoking status. Occupation and medical history may also affect the cost of premiums. Premium options include: Level premiums: The premium rate is fixed when you start the policy and does not change as you get older except in line with CPI indexation. Level premiums are initially higher (than stepped premiums) but will be more stable over time. This can help with affordability and reduce the risk that premiums will become unaffordable as you get older. Stepped premiums: The premium rate increases each year according to your age. Stepped premiums are initially more affordable than level premiums but over time may become more expensive. However, this option can provide you with flexibility as your needs change over time. Your financial adviser can assist in determining which premium option is most appropriate for you. Ownership Life, TPD and income protection policies can be owned personally or through a superannuation fund. Trauma insurance can be owned personally. When held within a superannuation fund, the policy is owned by the trustees usually for the benefit of the member. When making a choice of how to own the policy you need to consider the advantages and disadvantages of each option. Inside Superannuation In Personal Name Advantages · Premiums are paid using contributions into the fund (e.g. employer contributions) or your superannuation savings – this can help to ease your cash flow. · Tax concessions on contributions may reduce the effective cost of the premiums (e.g. salary sacrifice to cover the cost of premiums) · In some funds you may be eligible for automatic acceptance (for some cover) which means you will not have to provide evidence of health or income · The claim proceeds are usually tax-free · Claim proceeds will be paid directly to you, your estate or nominated beneficiary as appropriate. This ensures the money is available when you and your family need it · A wider range of benefits and features may be available · Income protection premiums are generally tax deductible Disadvantages · The policies may have less benefits and features than those offered outside superannuation due to legislation restrictions · Tax may be payable on claim proceeds, depending on circumstances and rules at the time · Your disposable income will be reduced as you need to pay premiums from your after-tax income · Premiums need to be paid from after-tax money and so may be a higher cost to you than premiums inside superannuation Taxation How insurance premiums and claim proceeds are taxed will depend on the type of insurance policy and beneficiary, but will also depend on whether you choose to hold the policy inside or outside of superannuation. You should seek specialist taxation advice to check the taxation applicable to your circumstances. Inside Superannuation In Personal Name Premiums · Premiums are deductible to the fund · Not deductible except for income protection policies Claim Proceeds · Life policy – the proceeds are taxable only if paid to a non-tax dependant · TPD – if you are under age 60 when you take this money out of superannuation tax may be payable · Income protection – the benefits are assessable income to you and are taxed at your marginal tax rate · The proceeds from a life, TPD or trauma policy are generally tax-free. However, the benefits from an income protection policy are assessable income and taxed at your marginal tax rate Application and Underwriting When applying for insurance you will need to complete an application form providing both personal and medical information so that the underwriter can assess the application. Some applicants may also need to undergo a medical examination and/or blood tests or a report may be requested from their usual doctor to determine whether to accept or decline the cover. Depending on your circumstances and health you may be asked to pay an additional premium, known as a loading, if you have an unfavourable medical history or display higher risk factors for developing chronic illness such as being overweight or high blood pressure. In some cases, the life insurance company may apply an exclusion to your policy. For example, a decision may be made to not cover your for high risk activities and sports or a pre-existing injury/illness. This means that if an event occurs that is excluded, the benefit under the policy will not be paid. Many policies are guaranteed renewable. This means that as long as you pay the premium you will continue to receive cover regardless of any changes in your circumstances or health. If you do not pay your premiums, your insurance will lapse. Some life companies may provide a short window of opportunity to pay your overdue premiums to maintain the cover if you have missed the due date. If your policy lapses and your health or circumstances have changed it may impact on your ability to get the same cover at the same premium. It is important to understand the benefits included in your policy, and optional extras. Benefits included are at no extra cost however optional extras may increase your premium. Your financial adviser can discuss the features of the recommended policy with you.
  15. There are some BIG changes coming to Superannuation from 1 July 2017. Watch this short video for an overview of them:
  16. Andrew Williams

    Transferring UK contribution pension to Australia

    No the QROPS rules do not apply to Irish Pensions. However they do have their own set of rules, funnily enough I have been looking at an Irish Pension for a client recently and in his case due to the pension type (buy-out bond) it is not possible to transfer it directly to Australia. I was told by the company that it can be transferred to the UK (subject to certain conditions) which then means if transferred it will be caught up in the QROPS environment (assuming a latter transfer to OZ occurs) however having been in discussions with my Irish counterpart such a move for this client is not be possible. So for him it seems that it is stuck where it is (that's not too say the same applies across the board). Regards Andy
  17. Andrew Williams

    Transferring UK contribution pension to Australia

    Very good summary Pommie. One thing to add about the New Zealand option....whilst this may theoretically be the case I am not sure how well it has been tested from an ATO point of view. From all of the commentary received by various Australian and New Zealand tax advisers it is clear that the Trans -Tasman agreement did not have this in mind when it was agreed (ie moving a UK pension which is viewed as assessable in the eyes of the ATO to NZ to then avoid ATO tax). I had put a few private rulings in to the ATO regards this prior to the new HMRC OTC of 25%, so pulled them when it was introduced. Certainly for me I really cannot see too many reasons why someone would want to consider a 25% hit (perhaps very limited circumstances), the other potential risk for this is that these schemes are very new , they were only opened fairly recently and prior to the HMRC changes to fill a gap for UK expats in Australia below age 55, therefore inflows had not really started and of course since the HMRC announcement will now be even more limited. The risk being that the fund may decide to wind up if it is not bringing in enough to make it viable. KR Andy
  18. Andrew Williams

    2017 Federal Budget Analysis

    First home savers, downsizers and small business are the winners in Treasurer Scott Morrison’s second Budget – while taxpayers face an increase in the Medicare levy. Note: These changes are proposals only and may or may not be made law Superannuation Contributions from downsizing the home Date of effect: 1 July 2018 Individuals aged 65 or older will be able to make non-concessional (after tax) super contributions of up to $300,000, using proceeds from the sale of the family home. This limit will: apply on a per person basis be in addition to the ordinary non-concessional contribution cap, and be available where the home has been owned for at least 10 years. Unlike other non-concessional contributions, it will not be necessary to meet a work test or have a ‘total super balance’ under $1.6 million. The amount contributed will not be exempt from the assets test used to assess eligibility for the Age Pension. First home super saver scheme Date of effect: From 1 July 2017 First home buyers will be able to save for a deposit by making voluntary concessional and non-concessional super contributions. Contributions will be limited to $15,000 per year (up to a total of $30,000) and will count towards the relevant contribution cap. Withdrawals can be made from 1 July 2018. Concessional contributions plus assumed earnings withdrawn will be taxed at the person’s marginal tax rate, less a 30% tax offset. The Government has provided an online estimator to help individuals calculate the potential benefit of the scheme. SMSF borrowings Date of effect: When law is passed Broadly, when new limited recourse borrowing arrangements are established, the loan balance will be included in an individual’s ‘total super balance’. The total super balance is used to determine a person’s ability to: make non-concessional contributions qualify for a Government co-contribution or a spouse contribution tax offset, and make catch-up concessional contributions above the annual caps from 1 July 2018, where certain conditions are met. Also, repayments made from the SMSFs accumulation balance will count towards the member’s transfer balance cap, if the borrowing supports a pension account. The transfer balance cap limits the total lifetime transfers a person can make to retirement phase pensions. Taxation Medicare levy increase Date of effect: 1 July 2019 The Medicare levy will increase from 2% to 2.5% pa to fully fund the National Disability Insurance Scheme. This increase will flow to a range of other taxes such as Fringe Benefits Tax. Small business accelerated depreciation Date of effect: 1 July 2017 The ability for small businesses with an annual turnover of $10 million or less to claim an immediate deduction for eligible assets costing less than $20,000 each will be extended for 12 months. HELP thresholds and rates Date of effect: 1 July 2018 The annual income threshold at which Higher Education Loan Program (HELP) repayments commence will be reduced to $42,000 (currently $54,869). Also, the repayment rate will start at 1% and increase progressively to 10%. Social Security Pensioner Concession Card Date of effect: From 1 July 2017 Individuals who lost entitlement to the Pensioner Concession Card as a result of the 1 January 2017 assets test changes will be reissued with the card. Energy Assistance Payment Date of effect: 20 June 2017 Eligible pensioners will be entitled to a one-off Energy Assistance Payment of $75 for singles and $125 per couple. Eligible recipients include Australian residents who qualify for the Age Pension, Disability Support Pension and Service Pension. Residency requirements for pensioners Date of effect: 1 July 2018 To be eligible for the Age Pension and Disability Support Pension (DSP), claimants will need to have 15 years of continuous Australian residence unless they have either: 10 years continuous Australian residence, with 5 years of this being during their working life, or 10 years continuous Australian residence, without having received an activity tested income support payment for a cumulative period of 5 years. Existing exemptions will continue to apply for DSP applicants who acquire their disability in Australia. Family Tax Benefit – Part A Date of effect: 1 July 2018 A single taper rate of 30 cents in the dollar will apply to income that exceeds the Higher Income Free Area ($94,316 in 2016/17). Currently, two tests are applied and the higher payment determines the entitlement. Family Tax Benefit – Part A and B Date of effect: 1 July 2017 The payment rates will not be indexed for two years. Indexation will resume on 1 July 2019. Liquid Assets Waiting Period Date of effect: 20 September 2018 The maximum Liquid Assets Waiting Period (LAWP) will increase from 13 to 26 weeks. The LAWP is a period an individual will be ineligible to receive Government income support. The new maximum period will apply to: singles without dependents with liquid assets of more than $18,000, or couples, or singles with dependents, with liquid assets of more than $36,000. Liquid assets are readily available assets such as bank accounts, terms deposits, shares and managed funds. Important information The Federal Budget Analysis prepared by the MLC Technical team, part of GWM Adviser Services Limited, appears below. The information contained in this Federal Budget Analysis is current as at 9 May 2017 and is prepared by MLC Technical, part of GWM Adviser Services Limited ABN 96 002 071749, registered office 150-153 Miller Street North Sydney NSW 2060, a member of the National Australia Bank Group of Companies. Any advice in this Federal Budget Analysis has been prepared without taking account of your objectives, financial situation or needs. Because of this you should, before acting on any advice, consider whether it is appropriate to your objectives, financial situation and needs. Any tax estimates provided in this publication are intended as a guide only and are based on our general understanding of taxation laws. They are not intended to be a substitute for specialised taxation advice or a complete assessment of your liabilities, obligations or claim entitlements that arise, or could arise, under taxation law, and we recommend you consult with a registered tax agent. Past performance is not a reliable indicator of future performance. Before acquiring a financial product, you should obtain a Product Disclosure Statement (PDS) relating to that product and consider the contents of the PDS before making a decision about whether to acquire the product.
  19. Andrew Williams

    ISA held in UK

    Thanks Ross. Hello Harry Put simply the fact that they are tax free in the UK is irrelevant to the Australia Tax Office (ATO). They will treated as investments and assessed for tax accordingly, therefore distributions and gains are required to be reported when you do your annual tax return (note though that the cost base essentially begins from date of Australian residence. However if you are going to be on a temporary resident visa the above may not be the case as opposed to if you will be a permanent resident/citizen. You mention this money is going to be your retirement money.......in that case you should consider the merits of cashing out of the ISAs prior to moving to Oz and then re-investing the funds into an Australian Superannuation Scheme when you are here (of course I would advise you seek professional advice on this matter). Kind regards Andy
  20. Andrew Williams

    HMRC Overseas Pension List Re-released

    No problem. Prior to the changes the time period that transferred monies had to remain in a QROPS was five clear tax years of non UK residency. The new rules have seen this time period extend to 10 clear UK tax years with an additional 5 years from date of monies arriving (whichever is greater). Whilst it does not seem that pre-April transfers will be caught in the post April transfer rules, the finance bill has not yet been passed through parliament and so it would be difficult to be absolute on this. Are you not happy with your current Scheme? KR Andy
  21. Andrew Williams

    HMRC Overseas Pension List Re-released

    HMRC has re-released the Recognised Overseas Pension Scheme (ROPS) list released following the temporary suspension it put in place on 14 April. This follows the March UK budget where vast changes to the QROPS system were made and so required Scheme Managers of QROPS to essentially reconfirm in writing to HMRC that they remain QROPS by the 13 April. The new list is here: https://www.gov.uk/government/publications/list-of-qualifying-recognised-overseas-pension-schemes-qrops/list-of-recognised-overseas-pension-schemes-notifications#australia The sole Australian Retail Scheme has again appeared on the new list which as a reminder is exclusive to members age 55 and over. Regards Andy
  22. This looks like it will impact on Australian resident UK expats who might wish to transfer their UK pension to a QROPS that is not Australian domiciled. https://www.gov.uk/government/public...e-on-transfers
  23. Andrew Williams

    Superannuation Changes (passed by law)

    Reduction in Concessional Contribution (SalarySacrifice/Pre-Tax Contributions) Cap Status: Passed Effective: 1 July 2017 The concessional contribution (CC) cap will reduce to $25,000 pa for all individuals regardless of age. The cap will be indexed in line with AWOTE in $2,500 increments. Individuals with sufficient surplus cash-flow could use the opportunity to maximise CCs for amounts made before 1July 2017 up to $35,000 for those who were 49 or over on 30 June 2016 and up to $30,000 for those under age 49. SMSF trustees should be mindful from1 July 2017 of unallocated reserves if any which may, when allocated, get counted towards the CC cap. Changes to Non Concessional Contribution (Post-tax Contributions) Cap Status: Passed Effective: 1 July 2017 The non-concessional contribution (NCC) cap will reduce from $180,000 to $100,000 pa. Individuals cannot make NCCs if they have a total super balance of $1.6 million or more at 30 June of the previous financial year. Eligible individuals will be able to access a three year bring forward of up to $300,000. Transitional measures will apply to the bring-forward rule. ​Personal Deductible Contribution Changes Status: Passed Effective: 1 July 2017 All individuals under the age of 75 will be eligible to make personal contributions for which they can claim a tax deduction up to the CC cap. Currently, individuals need to meet the 10% test (maximum earnings as an employee condition) to be eligible. This will enable people in a range of situations to make personal deduction contributions and potentially target the CC cap where that is currently not possible. Key examples include people who: are employed and receive SG contributions that are within the CC cap, but their employer doesn’t offer salary sacrifice arrangements switch from being a self-employed contractor to an employee during the course of a year and fail the 10% test due to employment income, and are residents for tax purposes who are working overseas for a foreign employer and their employer can’t or won’t contribute to an Australian super fund. Catch-up Concessional Contributions Status: Passed Effective: 1 July 2018 Individuals with super balances less than $500,000 will be able to access a higher annual cap and contribute their remaining unused CC cap on a rolling basis for a period of five years. Only unused amounts accrued from 1 July 2018 can be carried forward. This will enable individuals who take time out of work or work part-time to make catch-up contributions when they accumulate lumpy income or decide to go full-time. An opportunity exists for those who intend to sell a CGT asset in the future where they can accumulate the amount of unused CCs.They can then make a lump sum unused CC to offset the CGT liability on the sale of an asset by making a personal deductible contribution. Changes to TTR Income Streams Status: Passed Effective: 1 July 2017 Earnings and gains from investments held in a Transition to Retirement (TTR) pension will no longer be exempt and will be taxed at 15%. This change will apply to existing and new TTR income streams irrespective of the commencement date. Individuals will also no longer be allowed to treat certain superannuation income stream payments as lump sums for tax purposes. This change will have a significant impact on individuals running a TTR aged less than 60. This is because they will also pay tax on income payments, thereby negating the tax benefit for certain income earners. However, the strategy may still be beneficial when used for its intended purpose (ie for individuals wishing to reduce employment hours while maintaining their cash-flow at current levels). CGT relief is available for super funds for capital gains realised on the transfer of assets from pension phase before 1 July 2017. Introducing Transfer Balance Cap Status: Passed Effective: 1 July 2017 The total amount of super monies that can be transferred to pension phase will be capped at $1.6 million. The cap will be indexed in $100,000 increments in line with CPI. An apportionment approach will be used to determine how much cap space is available. Individuals in excess of the transfer balance cap on 1 July will need to either: transfer the excess amount to the accumulation phase, or withdraw the excess amount from their super fund. CGT relief will be provided to all complying super funds to adhere with the transfer balance cap rules. The CGT relief will enable funds to reset the cost base of assets reallocated from pension to accumulation phase before 1 July 2017 to comply with the transfer balance cap rules. Regards Andy Please note that the above information is general information only and should not be taken as financial advice.
  24. Andrew Williams

    Move Tax Free Lump Sum from Pension

    Hi Steve Sorry just to add a couple of points. Tax on lump sum - Typically when from a defined benefit scheme is taxed on the growth (and just the growth of the lump sum not the whole fund unlike defined contribution schemes) at a person's MTR. Tax on income - Typically when from a defined benefit scheme assessed at a person's MTR. Timing - The reason you are up against it from a timing point of view is that from 1 July 2017 you will not be able to contribute more than $100,000 to Super due to both age and contribution limits. Hope this clarifies things. Regards Andy
  25. Andrew Williams

    Move Tax Free Lump Sum from Pension

    Hi Steve Thanks for this. Typically when recommending setting up a SMSF $250,000 would seem to be the justified balance although when someone is so close to income drawdown this amount would tend to be a fair bit higher. Also given what is involved in the transfer process and setting up a SMSF from scratch as well as having it obtain QROPS status it would be very tight for you IF a transfer is to occur. I do now have an alternative solution/option for transferring pensions that does not involve having to use a SMSF (although I still use SMSFs in cases I think are warranted). If you wish to make contact feel free to PM or email Andrew@vistafs.com.au and I will explain our process and fees involved. Kind regards Andy