Australian superannuation maturing this year. Taxation implications?

[Kenny202]

Been living in Thailand for nearly 6 years retired never employed here or paid tax, never returned back to Australia and no property in Australia so I guess I am what they call a non resident for tax purposes. I did a bit of investigation a few years ago whether the non resident thing would effect my superannuation and as far as I could tell providing I waited until maturity there would be no tax resident or not. My Super is pretty bog standard employer contributions. I never salary sacrificed and I have made no contributions since leaving Australia. When I enquired with my super company they didn't seem to have a clue. Said Tax would be payable at full non resident rates (from memory 34%!), then said it maybe payable then said no tax would be payable if I drew money after maturity. They kept referring me to my accountant who was referring me back to the Super company. Colonial Mutual to so not a fly by night.

 

Has anyone here had recent experience in a similar situation to me? ie living here for more than 2 years and a non resident for tax purposes drawing on your super? 

 

 

[Fat is a type of crazy]

I can give you a part answer which may or may not be helpful. Others may be able to fill the gap or better still call the ATO on 61 2 62161111 and tell them you are calling overseas and request a callback. If the person who calls back isn't that helpful get him to please find a specialist.

 

Superannuation payouts  are generally tax free after you turn 60 regardless of if you are a resident.

The super you have paid has a taxed and untaxed component. The untaxed can result in significant tax if under 60 and this would be withheld by your superannuation fund.  If over 60 often tax offsets can reduce the tax payable to nil. 

 

If under 60 the amounts withheld by super funds for non-residents depend on if there's a tax treaty. I am not sure how the Australian Thailand tax treaty applies specifically to this case. Someone might know. 

If the amount will be taxed overseas it won't be taxed in Australia. If it won't be taxed overseas the Australian tax treatment will apply.

 

On ATO Community  it notes that if the tax treaty doesn't cause the super payment to only be taxed in the other country, and your super is being paid before age 60, then your super will be taxed in the same way as if you were an Australian resident, except the medicare levy of 2% won't be withheld for a payment to a non-resident, and the fund will withhold tax from the payment.

Best to call the ATO. 

 

Edited January 12, 2021 by Fat is a type of crazy

[Kenny202]

2 hours ago, Fat is a type of crazy said:

I can give you a part answer which may or may not be helpful. Others may be able to fill the gap or better still call the ATO on 61 2 62161111 and tell them you are calling overseas and request a callback. If the person who calls back isn't that helpful get him to please find a specialist.

 

Superannuation payouts  are generally tax free after you turn 60 regardless of if you are a resident.

The super you have paid has a taxed and untaxed component. The untaxed can result in significant tax if under 60 and this would be withheld by your superannuation fund.  If over 60 often tax offsets can reduce the tax payable to nil. 

 

If under 60 the amounts withheld by super funds for non-residents depend on if there's a tax treaty. I am not sure how the Australian Thailand tax treaty applies specifically to this case. Someone might know. 

If the amount will be taxed overseas it won't be taxed in Australia. If it won't be taxed overseas the Australian tax treatment will apply.

 

On ATO Community  it notes that if the tax treaty doesn't cause the super payment to only be taxed in the other country, and your super is being paid before age 60, then your super will be taxed in the same way as if you were an Australian resident, except the medicare levy of 2% won't be withheld for a payment to a non-resident, and the fund will withhold tax from the payment.

Best to call the ATO. 

 

But you can draw up to $205k at 58yo right? Supposedly without penalty. Same as 60yo, it's just that at 60yo you can draw the lot. (I was born May 1963). I guess to put it another way will my payout be any different being a non resident than if I lived in Australia? My superannuation company told me as long as I am still an Australian citizen I would receive my super as everyone else does without extra taxes / penalties as being a non resident for tax purposes has no bearing on superannuation pay outs. 

 

As far as treaty's etc goes, should have no bearing as my money will remain in Australia. I have never worked or paid tax in Thailand.

 

My super is fairly standard. I have never made extra contributions or salary sacrificed etc. I imagine there would only be a taxable component if I had been topping it up, or continued to contribute while I was overseas? I stopped contributing to super the day I stopped working in Australia. Since then I have retired, never worked overseas or in Australia

 

Appreciate your help ????

 

 

 

[Fat is a type of crazy]

8 hours ago, Kenny202 said:

But you can draw up to $205k at 58yo right? Supposedly without penalty. Same as 60yo, it's just that at 60yo you can draw the lot. (I was born May 1963). I guess to put it another way will my payout be any different being a non resident than if I lived in Australia? My superannuation company told me as long as I am still an Australian citizen I would receive my super as everyone else does without extra taxes / penalties as being a non resident for tax purposes has no bearing on superannuation pay outs. 

 

As far as treaty's etc goes, should have no bearing as my money will remain in Australia. I have never worked or paid tax in Thailand.

 

My super is fairly standard. I have never made extra contributions or salary sacrificed etc. I imagine there would only be a taxable component if I had been topping it up, or continued to contribute while I was overseas? I stopped contributing to super the day I stopped working in Australia. Since then I have retired, never worked overseas or in Australia

 

Appreciate your help ????

 

 

 

It sounds like you are correct. The example below is likely to be your situation and residency won't be an issue. The page on the ATO site that this came from talks about the different treatment of your after tax contributions that you made which have been taxed and those from your employer that can require further tax. If you google a few words it can take you to that page. I didn't know about the $205,000 thing as I am looking to work till 60. 

 

 

Tony is 56 years old and is retired. He receives his first lump sum super payment of $350,000 on 25 July 2018. His fund tells him this amount consists of $100,000 tax-free component and $250,000 taxable component. All the taxable component was taxed in the fund.

Tony includes the $250,000 taxable component as income on his 2018–19 tax return. This results in him paying the following effective rates of tax:

Effective tax paid by Tony

Tax-free component: $100,000                                                                       No tax

Taxable component – taxed element up to the low cap rate $205,000   0 per cent tax

Taxable component – taxed element over the low rate cap: $45,000     17 per cent tax

 

I think you are probably right that your residency is not going to affect your situation. Given the funds will stay in Australia the Thailand tax treaty is not likely to be an issue too.

If you rang your fund and their advice wasn't helpful I would be tempted to ring a second  time. The ATO could help just to confirm the final details.