Transfers from foreign superannuation funds to Australian complying superannuation funds

Broadly speaking, a superannuation lump sum received from a foreign superannuation fund within 6 months of becoming an Australian resident is tax-free where it relates only to a period when the taxpayer was not an Australian resident (or a period starting after becoming an Australia resident and ending before the payment is received).

However if a superannuation lump is paid from a foreign superannuation fund to the taxpayer after 6 months of becoming an Australian resident, then the earnings component while the person was an Australian resident is included in the taxpayer’s assessable income and taxed at their marginal rates.

The earnings component is essentially the growth in the superannuation benefits since the individual became an Australian tax resident.  The earnings component is calculated depending on whether the taxpayer was an Australian resident at all times during the period to which the lump sum relates.

No credit is allowed for any tax paid on the earnings in the foreign superannuation fund.

The following table is a brief general overview of the treatment of payments and transfers from foreign superannuation funds:

payments and transfers from foreign superannuation funds	taxpayer was not an Australian resident during the period of employment in a foreign country	lump sum is not paid into an Australian superannuation fund (i.e. paid directly to the taxpayer)	lump sum is paid into an Australian superannuation fund
within six months of becoming an Australia tax resident	tax-free
lump-sum received after 6-month period of becoming an Australian resident or terminating foreign employment		1. the earnings component is included in the individual’s assessable income and is subject to the individuals marginal rates. The remainder of the lump sum is tax-free.	1. the earnings component is included in the superannuation’s assessable income and is subject to 15% tax rate.  2. where an election has been made the earnings component is not subject to the concessional contributions cap of AUD 50,000. 3. the tax free component (i.e. pre-residency) is subject to the non-concessional cap of AUD 150,000 p.a

This information has been prepared in good faith, is in the nature of general comment only, and neither purports, nor is intended, to be advice on any particular matter.  You should not act or rely upon any matter or information contained in or implied without taking appropriate professional advice which relates specifically to your particular circumstances.  The authors and consultants expressly disclaim all and any liability to any person (whether a reader or not) who acts or fails to act as a consequence of reliance upon the whole or any part of this information.