Australia is a county of migrants with over 27.7% of the resident population having been born overseas (6.4 million people). Persons born in the UK continue to be the largest group of overseas residents accounting for 5.3% of Australia’s total population. This is followed by persons born in New Zealand (2.6%), China (1.8%), and India (1.6%).

Overseas born residents have often worked and accumulated superannuation interests overseas before migrating to Australia. When migrating to Australia some migrants access and withdraw their foreign super interests (this is not always possible and depends on the overseas super systems regulations and the taxpayer’s age), while others leave their super overseas to continue accumulating.

Australian tax residents that transfer their overseas superannuation interests to Australia will be taxed on the amount that the superannuation investment balance increased since they became an Australian tax resident. For example, when Dan migrated to Australia ten years ago his UK superannuation was worth $100,000. If the UK super balance has now grown to $200,000 and he transfers it to Australia, the $100,000 gain will be taxable.

If the overseas super gain (that is, the $100,000) is paid directly to the taxpayer they will be taxed on the gain at their marginal tax rates (so this could be up to 47% tax).

An alternative option to reduce the tax liability is to have the overseas super gain paid into an Australian superannuation fund. The gain will then be taxed at a flat 15%.

Taxpayers who transfer overseas super to an Australian regulated super fund will not be able to access that super until they meet a condition of release.


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