When you transfer a lump sum from a Foreign Superannuation Fund (FSF) to an Australian Superannuation Fund you will be assessable on the applicable funds earnings where you have been a resident for more than 6 months. Refer to s 305 – 70 of the Income Tax Assessment Act.
This would work broadly as follows:
1. You are an Australian Tax Resident and have been for 5 years.
2. You want to transfer your superannuation balance from overseas.
3. The current balance of your overseas Superannuation Fund is $500,000.
4. The balance of your Superannuation balance 5 years ago was $450,000.
5. The applicable funds earnings is $50,000.
6. Depending on whether or not the $500,000 balance is paid into your Superannuation Fund or your own name will determine how the $50,000 is assessed. If you elect to receive the balance into your own name you will be tax in your own name. However, if you elect to receive the balance in your Superannuation Fund the $50,000 will be assessed in the Superannuation Fund.
7. You should consider what your marginal rate will be at the time of the transfer, keeping in mind the top marginal rate for an individual is 45%, while the Superannuation tax rate is a flat 15%.
8. Also if you decide to initially transfer the funds into your own name and then at a later date transfer the funds into your Superannuation Fund you will be subject to the contribution caps.
If you would like to discuss further please contact us:
McNamara and Co - Chartered Accountants, located minutes from the Melbourne CBD
www.mcnamaraandcompany.com.au/contact-us
Phone +61 3 9428 1062
Email admin@mcnamaraandco.com
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