Business News

Trouble ahead for foreign super transfers

Transferring super out of the United Kingdom back to Australia might be a viable option for SMSFs in light of the historic Brexit vote in favour of Britain withdrawing from the European Union and the proposed lifetime non-concessional contribution (NCC) limit, according to a technical expert.

“I’ve indicated that there’s trouble ahead for foreign transfers because of what’s happening in the UK as we speak,” Miller Super Solutions founder Tim Miller told the Chartered Accountants Australia and New Zealand 2016 SMSF Day in Sydney today.

“The UK leaving Europe changes my dialogue about foreign super transfers because that announcement has seen the markets crash quite significantly.

“So the value of the pound amongst [other currencies] has deteriorated so therefore there might be some capacity for people to want to get their money out of the UK.”

Miller said Australian pensions and overseas pensions were taking quite a hit from a currency point of view.

“So, and this is not a positive issue clearly, they may see a drop in valuation and it may bring people well under that lifetime contribution limit,” he explained.

“This could be the opportunity [where trustees decide] that if there’s uncertainty about the future of the British pound, maybe it is worthwhile getting their money out of the UK and transferring it over into Australia.

“Foreign super transfer is an area where we’ve got some issues that we need to deal with going forward.”

Furthermore, the introduction of a lower lifetime NCC limit of $500,000 will also have an impact on foreign transfers.

“This is going to severely impact how much money is transferred from overseas,” Miller warned.

“Because if we had a dual contribution strategy where we had money sitting here in Australia and we had money sitting overseas, by transferring that money from overseas into our SMSF it’s going to limit what we can actually contribute based on our wealth sitting outside of super in Australia.

“I think that’s probably the biggest issue associated with foreign transfers moving forward.”

Copyright © SMS Magazine 2024

ABN 43 564 725 109

Benchmark Media

Site design Red Cloud Digital