By Amanda Morrall
Yes, no and maybe.
Although the Trans-Tasman portability agreement does allow for New Zealanders to repatriate super savings (same goes for Aussies living in NZ), Australia hasn't yet passed the necessary legislation so everyone with lost money is stuck in a holding pattern for now.
With an estimated NZ$16 billion in super savings waiting to be tapped (much of it believed to belong to Kiwis who spent time working in Australia), there are undoubtedly a number waiting for Australia to get its act together in this regard. New Zealand apparently cleared the necessary hurdles a while ago.
(To see if you have "lost money" in Australia click her to access the on-line superseeker).
(Unrelated link to Inland Revenue's unclaimed money list...it's big too).
The initial expectation was that the ink would be dry by now, so presumably it can't be much longer. That said, when I wrote a story on this subject back in August 2009, the deal was supposed to be complete by August 2010.
The second part of your question is trickier to answer and ultimately comes down to your needs and goals. For that, I would suggest a financial adviser might be able to provide some guidance. (For suggestions on how to find a financial adviser see the Institute of Financial Advisers's website.
One of the arguments working in favour of repatriation, is simplification.
Unless you're real keen, chances are you don't know the amount of your "lost money", where it is invested, what it is invested in, whose managing it, how your funds are performing and the fees you're paying. The same might go for your KiwiSaver funds.
From a pure management perspective, it make make life easier to roll your Australian super money into your KiwiSaver and then educate yourself on all of the above.
There is a small tax advantage to bringing your Australian super back home, particularly if you're very keen on Australian shares. That's because capital gains on Australian equities don't apply in New Zealand.
However, in talking to Paul Newfield, a senior investment consultant from TowersWatson with experience in this area, I was told this would be so slight as an advantage, relatively to other tax consideration, as to not make a material difference.
He said while capital gains are taxed at 10% in Australia, superannuitants there get the benefit of something called "franking credits" calculated on the company tax rate.
In general terms, Australians are taxed at a flat rate of 15% at two main points: on contributions, and on earnings.
"However, depending on the mix between income and capital gains, you'll typically find even the largest funds, their tax rate will be somewhere in the order of 12%,'' Newfield argued.
KiwiSaver, by comparison, is taxed one of two ways.
If you are invested in a PIE (Portfolio Investment Entities) you will be taxed according to a PIR (that's prescribed investment rate). Alternatively, if the scheme you are in is invested in what's called a "widely held superannuation fund) you'll be taxed at 28%.
Back to PIR. I've written about this before and also the importance of knowing your PIR in case you've been mistakenly been put in the wrong one, so read this story.
PIR rates (we're talking about New Zealand KiwiSaver here) align with your marginal tax rate and break down as follows.
| Income | Tax rate |
| $14,000 or less | 10.5% |
| $14,000 - $48,000 | 17.5% |
| $48,000 - $70,000 | 30% |
| $70,000 - | 33% |
While I'm at it I might as well mentioned ESCT. For the benefit of those who don't know what that is; it stands for Employee Superannuation Contribution Tax. ESCT explained here.
Another point worth mentioning is that it is a portion of some Australian superannuation schemes are open; that is you are not locked into them until 60 or 65. So there would be nothing stopping you from taking that money out and investing somewhere altogether different, or paying down debt or heavens forbid, treating yourself to a holiday.
With the exchange rate working in your money, it might be a good option for those wanting to pay down debt in New Zealand. Alternatively, if you wanted to keep two supers going one in each country but shovel more in KiwiSaver, you could take that open-section of Australian money and plunk it into your KiwiSaver account as a voluntary contribution.
And how about Australians with KiwiSaver money?
Australians wanting to tap those funds can do so, provided they roll them into a comparable super scheme across the Tasman.
The downside of doing that before the portability agreement falls into place is that they would lose the Member Tax Credits.
Newfield suggested many Australians woud likely contemplate hitting the eject button on their KiwiSavers once the agreement is place given the tax reasons explained above.
The tax trump card that New Zealand could play, and which would have a bearing on this scenario, is the possible introduction a zero tax rate for non-resident investors.
Newfield describes it as the "sleeping giant" as effectively it would level the playing field, at least with respect to foreigners.
Given these multitude of options and considerations, it would be prudent to consult with an authorised financial adviser to get some advice that is geared to your individual circumstances.
Do you have a question about KiwiSaver. Visit our KiwiSaver Q&A section to read other questions generated by our readers or to send us another.
If we can answer it, we'll do our best to find someone who can.
For more on Australian Superannuation frequently asked questions click here).
Employee Superannuation Contribution Tax
PIR rates outlined here.
ESCT explained here.
2 Comments
If for no other reason than one cannot trust the governments in NZ ( particularly National ) , because they keep changing the rules on Kiwisaver , and using it as a political football ... leave yer Aussie super in Australia .
.... a second reason is that Aussie tax on those funds is far more beneficial to growing the funds , than Kiwisaver's is ....
And , as appalling as the track record of the Australian funds management industry is , New Zealand's is manifold worse .
Not sure on the rules here (or even if there are any), but if you transfer your Aussie super money to KiwiSaver, can you use it towards your first home deposit? I bet you can't. That means providers will have to ringfence another load of money to make sure that the special rules that apply to *that* bit, are adhered to. Having complicated twiddly bits and asterisks makes KS very difficult to explain to people sometimes.
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