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ARTICLE · 08 AUGUST 2020

Withdrawing from your foreign super fund? Know your tax consequences first!

Cooper Grace Ward
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The withdrawal may be treated as a taxable capital distribution from a foreign trust and taxed at your marginal rate.

AustraliaTax
Fletch Heinemann
Fletch Heinemann
Caitlin McKenna
Caitlin McKenna
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Expats returning to Australia should check before withdrawing from their foreign super fund.

In many cases, the withdrawal will be treated as a taxable capital distribution from a foreign trust and taxed at the individual's marginal rates.

What are the risks of withdrawing from a foreign super fund?

The main risk comes from the definition of 'foreign superannuation fund' - it is much narrower than it sounds.

Australian residents are taxed concessionally on lump sums they receive from either:

  • a 'foreign superannuation fund'
  •  a foreign 'scheme for the payment of benefits in the nature of superannuation upon retirement or death'.

For example, a resident will not be taxed on a lump sum they receive from a foreign superannuation fund within six months after becoming a resident (subject to certain conditions).

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© Cooper Grace Ward Lawyers

Cooper Grace Ward is a leading Australian law firm based in Brisbane.

This publication is for information only and is not legal advice. You should obtain advice that is specific to your circumstances and not rely on this publication as legal advice. If there are any issues you would like us to advise you on arising from this publication, please contact Cooper Grace Ward Lawyers.

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