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Tax on overseas Super coming

Legislation changing the tax rules for foreign superannuation interests has been passed. The new rules will apply from April 1 this year.

This would be a key date if you have made a withdrawal from a foreign superannuation scheme and have not paid tax or if you have a foreign superannuation interest and are considering whether to transfer those funds to New Zealand.

This is because withdrawals and transfers up to March 31, 2014 benefit from a special 15% option: only 15% of the withdrawal/transfer amount is taxable.

Further, the Government made a tweak to the legislation to make the 15% option available to anyone who has applied to their foreign superannuation scheme for the release or transfer of funds to a New Zealand scheme before April 1, including where the transfer is not completed by that date.

The 15% option may be beneficial to those who are yet to bring their foreign funds onshore, as the new rules will tax a progressively higher percentage of the withdrawal based on how long a person has been New Zealand resident.

However, other considerations, including any foreign tax implications will also need to be considered.

Therefore, we strongly suggest that you talk to your regular KPMG advisor on this matter.

Chandan Ohri is Managing Partner IT Services at KPMG based in Auckland. KPMG is the Sponsor of the ‘Business Excellence in ICT Category’ of the Indian Newslink Indian Business Awards 2014.

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