Hi, I'm a tax paying resident of Australia and have been so for over 10 years. I'm a duel national of both Australia and the UK. I just had a small lump sum payment paid into my UK bank account from a UK private pension. It is for about $26,000. I am not planning to transfer the money here. I do not have any other taxable income in the UK other than a very small amount of bank interest. I will not be getting anymore private pension from the UK. Under UK rules you are allowed personal living allowance before you are taxed. This is currently about $25,000. This means in the UK I will be taxed the equivalent of about $1,000. On my ATO tax returns, what section or number on the form does my tax agent mention the $26,000 lump sum and also the taxed paid to HMRC for the $1,000? I think this will be new territory for my agent and I want to double check before I sign anything to submit to the ATO. Thank you
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Hi @Stickybaby
If the amount is assessable you'd report it under Foreign pensions and annuities.
If you're eligible for a credit for tax paid overseas when you enter this in, it'll open the section for you to claim a foreign income tax offset.
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Hi @Stickybaby
If the amount is assessable you'd report it under Foreign pensions and annuities.
If you're eligible for a credit for tax paid overseas when you enter this in, it'll open the section for you to claim a foreign income tax offset.
I have a similar question relating to the UK opportunity to drawdown 25% of 2 of my my UK pensions as a UK tax free lump sum. Between them i may get around £4,000. I have never activated the UK Pensions in the past as I have only retired since July last year. I am looking at making the drawdown in July this year into my UK bank account..at the time I will effectively have almost zero Australian taxable income (I have about $200 a year in share dividends). How should the value of my drawdown be calculated as I understand it will need to take account of the fund value when I moved to Australia and what date do I take this from ? Is it the date I obtained permenent resiency or when I became an Australian tax payer. How do I calculated the growth as the value of money has changed significantly over the 20 odd years and CPI has eroded the real value of the money too? I don't use a tax agent.. I also need to understand if an Interntional SIPP is easier to manage for Australian tax or a QROPS fund as I have two other funds which I need to convert to an income stream as well as the two I want to draw down.
Hi AriATO - thanks for your reply to Stickybaby. I am in a similar position but haven't taken the lump sum payment out yet. Can you advise whether the whole lump sum UK pension would be assessable in Australia, if it small enough to be under the personal allowance (threshold) in the UK? And is any tax paid to HMRC on the lump sum amounts over the personal allowance ($1k in the above example) eligible for a tax credit in Australia? I am trying to work out when best to take my lump sum, ie what the tax liability would be in Australia if I take it now. Thank you.
Hi @roset,
If you’re an Australian tax resident, you’ll probably need to report the full lump sum from your UK pension, even if it’s under the personal allowance there. The UK’s tax-free threshold doesn’t automatically apply in Australia.
If you paid tax to HMRC on any part of the lump sum, you might be able to claim a foreign tax credit in Australia to reduce what you owe here.
Tax rules can be tricky, so it’s a good idea to check with a tax expert to make sure you’re doing it right and getting any credits you’re entitled to!
Here is some info on foreign pensions that could be helpful.
Hi Stickybaby, I am in a very similar position to you, but haven't received the lump sum from my UK pension yet. I am researching when best to do access this. Can you confirm that your lump sum hasn't been taxed at an emergency code tax rate? Ie you have been given the full personal allowance and only the amount over the allowance has been taxed at the lowest marginal rate? I've read that if you haven't earnt in the UK for a while HMRC puts you on an emergency higher tax rate. Thanks.
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