If I transfer my UK pension funds to Australia will I be taxed in the process, and if so how much?

If you transfer your UK pension funds across to an Australian superannuation fund as a lump sum there will only be taxes to pay if you do not complete the transfer within 6 months of arriving in Australia on a permanent basis.

In other words, if you arrive and enter Australia on a permanent visa then the 6 month period commences from that day.

If you arrive on a temporary visa then you have until your visa becomes permanent to decide to transfer and you will not be penalized whilst on a temporary visa.

If for various reasons you decide not to transfer the funds within the first 6 months of permanent residency then the tax that will be applied is described in Section 305 of the tax act.

Essentially, once the 6 month window passes then the value of the funds at the date of residency becomes the starting value upon which any future gains are taxed. The future tax that will be payable will be based upon the difference between the value at the date of residency and the actual value transferred.

Under normal circumstances the tax that will be applied is calculated at the rate of 15% of the increased value with that amount being drawn from the funds themselves.

If your tax rate is very low it may be more appropriate to pay the tax personally, however, in a majority of cases, the fund payment method is by far the simplest and most cost effective.

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