Key Highlights

  • Money held in a foreign super fund may potentially be transferred to a complying Australian super fund or withdrawn directly as a lump sum.
  • Whether a transfer or Withdrawal is permitted depends on the foreign fund's rules and the laws of its home country.
  • Australian tax may apply to the applicable fund Earnings component of a transfer or payment received by an Australian resident.
  • Transfers between Australian super funds and New Zealand KiwiSaver schemes are covered by separate Trans-Tasman retirement savings arrangements.

Australians and other individuals who hold retirement savings overseas can face different rules when bringing those funds into Australia's Superannuation system. The Australian Taxation Office states that money held in a foreign super fund may, in certain circumstances, be transferred to a complying Australian super fund or withdrawn directly as a lump sum.

The treatment of a particular foreign retirement arrangement is not determined solely by the terminology used in its home country. Depending on the country's retirement income system, an arrangement described locally as a retirement fund, pension fund, retirement savings plan or another similar structure may be considered a foreign super fund for Australian tax purposes.

The availability of a transfer or withdrawal depends on the rules governing the foreign fund and the laws of the country where the fund is established.

Transferring Foreign Retirement Savings to Australia

A person holding money in a foreign super fund may be able to transfer the funds into a complying Australian super fund. Such a transfer brings the foreign retirement savings into Australia's superannuation framework, subject to the applicable requirements.

The tax treatment is also relevant. Where a transfer is received in Australia or by an Australian resident, Australian tax may apply to the applicable fund earnings component.

Applicable fund earnings generally represent the earnings that accrued on the foreign superannuation interest from the time the individual became an Australian resident for tax purposes. This means the tax treatment is linked to the growth of the foreign super interest during the relevant Australian tax-residency period.

Lump-Sum Withdrawals From Foreign Funds

Transferring money to an Australian super fund is not the only possible pathway. A person may also be able to withdraw a lump sum directly from a foreign super fund, depending on the rules of the overseas fund and the relevant country's legislation.

Where a payment is received in Australia or by an Australian resident, the applicable fund earnings component may be subject to Australian tax.

The distinction between the original foreign super interest and earnings accrued after Australian tax residency is therefore relevant when determining the Australian tax treatment of a payment.

Country-Specific Rules Can Affect Access

Foreign retirement systems operate under different legislation, meaning access to accumulated retirement savings can vary significantly between jurisdictions. A fund may impose its own conditions on withdrawals or transfers, while the foreign country's laws can place additional restrictions on how retirement savings are accessed.

Consequently, holding an overseas retirement account does not automatically mean the balance can be transferred to Australia or withdrawn at any time. Both the foreign fund's requirements and Australian tax rules can be relevant.

New Zealand and KiwiSaver Transfers

Transfers between Australian super funds and New Zealand KiwiSaver schemes are treated differently from other foreign super fund arrangements.

The Australian and New Zealand systems operate under the voluntary Trans-Tasman Retirement Savings Portability scheme, which provides a specific framework for transferring eligible retirement savings between participating Australian super funds and KiwiSaver schemes.

This separate treatment means that KiwiSaver transfers should not automatically be assessed under the same rules that apply to other foreign super funds.

Conclusion

Foreign retirement savings can potentially be moved into Australia's superannuation system or withdrawn as a lump sum, but the available Options depend on the foreign fund's rules and the legislation of its home country. For payments received in Australia or by an Australian resident, Australian tax can apply to the applicable fund earnings accumulated since the individual became an Australian tax resident. New Zealand KiwiSaver transfers are subject to separate Trans-Tasman portability arrangements. The distinction between the original foreign super interest, subsequent earnings and the type of retirement arrangement is therefore important when considering the Australian treatment of overseas retirement savings.