I am 35 and working for an Australian company. I have recently returned from three years working for its New Zealand subsidiary. During that time, I accrued about $NZ13,000 in the KiwiSaver superannuation fund, including some salary sacrifice amounts. The problem is that now having returned to work back home to the Australian parent company, and very unlikely to ever return to New Zealand, I appear to have no capacity to access this fund. I want to amalgamate it with an Australian equivalent fund, preferably my current fund, Australian Super. Do I have any choice but to watch this NZ fund become slowly eroded in annual and other management fees until my retirement in my 60s? C.H.
Not so! You are quite able to transfer your full KiwiSaver account to your current fund, since it is a complying super fund. A self-managed super fund could not accept such a transfer.
You will need to supply your Australian fund with the components of your NZ benefit. The transfer, must be for the entire balance and it will be treated as a non-concessional contribution (NCC). This will count towards the NCC cap ($100,000 in 2017-18) and to your total superannuation balance (TSB). If your TSB exceeds $1.6 million you may not be allowed any further NCC but it doesn't sound like you'll have this problem.
Your transferred retirement benefit will be held in your super fund in two parts - the NZ-sourced benefit, which you can access at the NZ retirement age of 65, and the Australian benefit. The latter will be mostly "preserved", which will be accessible once you meet a "condition of release" (usually retirement) after age 60, or when you're 65 if you continue to work. Both benefits will be untaxed on withdrawal.
It's quite possible that, in 25 years' time, the Australian "preservation" age will have been upped to 65, making life much simpler for you.
I receive a Public Service Super (PSS) pension of about $137,000 as a former federal public servant, which more than meets my transfer balance cap. I had funds invested in a NAB/MLC pension account, which I transferred to the accumulation phase before July 1 to comply with the government's superannuation and taxation policy changes. NAB/MLC has charged me a fee of $3300 for making this change. My question is: is this fee tax deductible as it is a cost of complying with the government's policy changes? M.J.
A portion of your PSS fund will be in excess of your $1.6 million transfer balance cap, given that the defined benefit pension is measured by multiplying by 16. Your NAB/MLC pension is thus all in excess of the cap.
The description of the fee you paid is a little unclear. If it was charged to your pre-July 1 pension fund, it would not be deductible as the fund was untaxed. If it was charged to your subsequent accumulation account, then it should have reduced any tax payable by the fund in the 2016-17 year. However, the Australian Prudential Regulation Authority (APRA), in its deliberation on the sole purpose test, explains that if the advice covers non-fund matters, then that super fund should only cover a proportion of the cost. (See its Circular III.A.4.)
If instead, the fee was an adviser's service fee charged to you personally, then it may be deductible under certain circumstances. The Tax Office states that ongoing expenditure in servicing a portfolio is deductible if the fee relates to gaining or producing assessable income. Again, if the advice covers other matters or relates in part to investments that do not produce assessable income, only a proportion of the fee is deductible. (See the ATO's Taxation Determination 95/60.)
If you are over 60, and part of your PSS pension is taxable, the advice would thus have been in relation to producing assessable income and you should then be able to claim at least some of the fee. Talk to your tax accountant. Such people, once they know all the details, have been known to produce miracles.
My husband and I are in our mid-70s and on a full age pension. We have about $250,000 in our super, $45,000 in fixed deposit and $20,000 in other assets. We would like your advice as we intend to help our married son buy a house with $100,000 from us. How would this contribution affect our pension with the government i.e. Centrelink? Our son is very responsible and looks after us in every way. We would like to help him out. B.S.
Centrelink's gifting rules allow you to give away as much as $10,000 in any one financial year and up to $30,000 over five consecutive financial years.
If you give away $100,000 in one financial year, the excess $90,000 is counted by both the assets and income tests for five calendar years from the date you gift the money. In your case, you should continue to receive the full age pension.
However, the question arises whether you can afford to give your son roughly a third of your total savings? Eventually, you are likely to need it all. Perhaps you can lend him the money for five years, to be placed into a mortgage offset account, and notify Centrelink of your loan. Hopefully, after five years, he can afford to return it.
If you have a question for George Cochrane, send it to Personal Investment, PO Box 3001, Tamarama, NSW, 2026. Help lines: Financial Ombudsman, 1300 780 808; pensions, 13 23 00.