Is accruing interest on super after retirement taxable?

[Kenny202]

Hoping someone from Australia will now....I am at full maturity age where if I withdrew my total super out it would be non taxable. My super was very straight forward...only employer contributions.

I have already made a first small withdrawal a year ago and in that time the money has earned interest. I am just wondering if the interest I have accrued after making an initial and further withdrawals is taxable?

It is a fairly small amount anyway, probably under the tax free thresh hold although I been here a long time now and non resident for tax purposes.

 

Hadn't thought about it too much before but providing my money is invested in the same super account I had for years, before and after retirement.... in the same fund....is the interest I earn on my Super fund taxable after making withdrawals during maturity age?

[KhunHeineken]

You have said you are a non resident for tax purposes.  I gather the amount you withdrew is earning interest in a bank account in Australia.  As a non resident for tax purposes, there is no tax free threshold. 

 

Here's the non resident tax brackets.

 

You would be up for 32.5% tax on the interest you earned. 

 

At a tax rate of 32.5%, you might consider moving the money offshore.  

 

Oh, and before you ask, the below tax brackets are not just for guys like Paul Hogan. 

 

Foreign resident tax rates 2023–24

Taxable income	Tax on this income
0 – $120,000	32.5c for each $1
$120,001 – $180,000	$39,000 plus 37c for each $1 over $120,000
$180,001 and over	$61,200 plus 45c for each $1 over $180,000

Edited April 8 by KhunHeineken

[Kenny202]

No only withdrew 2 smallish amounts to supplement income. The main principle is still in the original super account earning interest. Not concerned about the money I withdrew or withdraw....I am concerned if the interest earned in my original superannuation account is / will be taxable

[KhunHeineken]

17 minutes ago, Kenny202 said:

No only withdrew 2 smallish amounts to supplement income. The main principle is still in the original super account earning interest. Not concerned about the money I withdrew or withdraw....I am concerned if the interest earned in my original superannuation account is / will be taxable

These are your words.

 

"I have already made a first small withdrawal a year ago and in that time the money has earned interest. I am just wondering if the interest I have accrued after making an initial and further withdrawals is taxable?"

 

Yes, as a non resident, the interest is taxable at 32.5%. 

 

As for the income generated by the super fund, keep an eye on the other thread running.  It' a complex issue of tax residency, DTA's etc.  Tax residency laws in Australia are set to change, as well at the DTA between Australia and Thailand being updated in the future, as well as Thailand looking to tax the remitted funds of foreigners. 

[Kenny202]

1 hour ago, KhunHeineken said:

These are your words.

 

"I have already made a first small withdrawal a year ago and in that time the money has earned interest. I am just wondering if the interest I have accrued after making an initial and further withdrawals is taxable?"

 

Yes, as a non resident, the interest is taxable at 32.5%. 

 

As for the income generated by the super fund, keep an eye on the other thread running.  It' a complex issue of tax residency, DTA's etc.  Tax residency laws in Australia are set to change, as well at the DTA between Australia and Thailand being updated in the future, as well as Thailand looking to tax the remitted funds of foreigners. 

So you don't know right?

[gearbox]

Interest earned in super if you are in pension phase is not taxable, whether resident or not.

 

If your super is still in accumulation phase the interest is super income and is taxable at 15%.

 

If your money is outside super then the non resident rules for interest apply.

 

It is in your best interest to keep your money in super in pension phase, no income is taxable. Hard to get zero tax anywhere in the world.

Edited April 8 by gearbox

[Kenny202]

8 minutes ago, gearbox said:

Interest earned in super if you are in pension phase is not taxable, whether resident or not.

 

If your super is still in accumulation phase the interest is super income and is taxable at 15%.

 

If your money are outside super then the non resident rules for interest apply.

 

It is in your best interest to keep your money in super in pension phase, no income is taxable. Hard to get zero tax anywhere in the world.

Not really sure what you mean by pension phase. I am not on the pension as I live outside the country but I am retired and have filled out the declaration. I haven't converted my Super into a pension type fund as of yet in fact I was told that can have tax implications.

 

My money has been in the same super account / fund for years while I was working and since I left work. I reached maturity age last year...made a small withdrawal and left the balance of the money in the super fund which is accruing interest. I have just withdrew another small amount. I checked at the time and if I withdrew the total amount of super at maturity age no tax was payable.

 

So is that correct? As long as I leave my money in the original super account, any interest earned on the balance now and in the future is non taxable even if I make withdrawals? Is this what you mean by pension phase or am I in the accumulation phase?

 

Many thanks for your help 🙂

Edited April 8 by Kenny202

[gearbox]

20 minutes ago, Kenny202 said:

Not really sure what you mean by pension phase. I am not on the pension as I live outside the country but I am retired and have filled out the declaration. I haven't converted my Super into a pension type fund as of yet in fact I was told that can have tax implications.

 

My money has been in the same super account / fund for years while I was working and since I left work. I reached maturity age last year...made a small withdrawal and left the balance of the money in the super fund which is accruing interest. I have just withdrew another small amount. I checked at the time and if I withdrew the total amount of super at maturity age no tax was payable.

 

So is that correct? As long as I leave my money in the original super account, any interest earned on the balance now and in the future is non taxable even if I make withdrawals? Is this what you mean by pension phase or am I in the accumulation phase?

 

Many thanks for your help 🙂

The only way the super income becomes tax exempt is when you move your super from accumulation to pension phase (income stream). I'm more or less in the same boat although I'm a tax resident, this in principle won't matter unless you have a SMSF and you need to satisfy the residency tests.

 

https://simplyretirement.com.au/tax-super-overseas

 

If you get Oz super pension it may be taxable under the new Thai rules...that is if you bring it to Thailand via bank transfers. Australia won't tax your super pension and income generated by your super even if you are non resident

[scorecard]

On 4/8/2024 at 8:45 PM, Kenny202 said:

So you don't know right?

He actually knows very little bur good at writing bullshed and annoying / upsetting other members. 

 

I blocked him six months ago but somehow he's got past my block. I will do the block again.

[KhunHeineken]

On 4/8/2024 at 1:45 PM, Kenny202 said:

So you don't know right?

You don't even know what type of plan your Super is in.  :)

 

You asked about interest earned on your withdrawals and I answered.  32.5% as a non resident for tax purposes

 

 

 

[KhunHeineken]

20 hours ago, scorecard said:

He actually knows very little bur good at writing bullshed and annoying / upsetting other members. 

 

I blocked him six months ago but somehow he's got past my block. I will do the block again.

I didn't get past your block.  You didn't block me in the first place.  Just admit it. You enjoy reading my posts. 

[Kenny202]

On 4/11/2024 at 7:05 AM, KhunHeineken said:

You don't even know what type of plan your Super is in.  🙂

 

You asked about interest earned on your withdrawals and I answered.  32.5% as a non resident for tax purposes

 

 

 

The 32% on withdrawals Superannuation completely false. Have clarified all that with accountant and super company. The Super company with holds 15% on earnings so no more to pay on withdrawal or at any time. No tax return is necessary as far as super goes. As gearbox said you can save the 15% with holding by moving to a pension stream. 32% as a non resident is worst case scenario if you have money invested with a bank etc and you haven't declared yourself as a non resident or haven't instructed the financial institution to with hold mandatory non residents flat rate 10% tax.

[Kenny202]

On 4/8/2024 at 10:52 PM, gearbox said:

The only way the super income becomes tax exempt is when you move your super from accumulation to pension phase (income stream). I'm more or less in the same boat although I'm a tax resident, this in principle won't matter unless you have a SMSF and you need to satisfy the residency tests.

 

https://simplyretirement.com.au/tax-super-overseas

 

If you get Oz super pension it may be taxable under the new Thai rules...that is if you bring it to Thailand via bank transfers. Australia won't tax your super pension and income generated by your super even if you are non resident

I went though the process of setting up a pension stream this week and hit an unexpected snag. One of the requirement of the pension stream / tax saving is that you have a residential address in Australia (easy... my sons address) and that you are IN Australia when you apply for the pension stream and receive the Super companies confirmation. Could all be done online in a day. Doesn't say you have to be living in Australia, just that you have to be in OZ when you apply. I could have actually completed the application and process and got the pension plan but the super company did advise the ATO may, and often do check. And very easy for them these days to check if you are in the country at any given time. Worst case scenario you get a tap on the shoulder in the future have to pay any back taxes owing (15% that you saved on tax) plus a fine. Anybody else run into this or have a work around?

[gearbox]

14 minutes ago, Kenny202 said:

I went though the process of setting up a pension stream this week and hit an unexpected snag. One of the requirement of the pension stream / tax saving is that you have a residential address in Australia (easy... my sons address) and that you are IN Australia when you apply for the pension stream and receive the Super companies confirmation. Could all be done online in a day. Doesn't say you have to be living in Australia, just that you have to be in OZ when you apply. I could have actually completed the application and process and got the pension plan but the super company did advise the ATO may, and often do check. And very easy for them these days to check if you are in the country at any given time. Worst case scenario you get a tap on the shoulder in the future have to pay any back taxes owing (15% that you saved on tax) plus a fine. Anybody else run into this or have a work around?

Use VPN and set your VPN proxy to be in Australia, otherwise they may block your pension stream application. AFAIK this requirement may be invented by your fund....never heard about this requirement.

 

The AML/KYC rules are getting tightened, I got a credit card application put on hold by HSBC Australia, as I applied online from Thailand. Use always VPN when dealing with the banks, financial institutions and the government.

[Kenny202]

59 minutes ago, gearbox said:

Use VPN and set your VPN proxy to be in Australia, otherwise they may block your pension stream application. AFAIK this requirement may be invented by your fund....never heard about this requirement.

 

The AML/KYC rules are getting tightened, I got a credit card application put on hold by HSBC Australia, as I applied online from Thailand. Use always VPN when dealing with the banks, financial institutions and the government.

The processing of the online form not a problem. I am sure I could've completed it and converted to pension stream as fa as the Super company concerned. The only reason I noticed it was when it came up with a space for Australian address  / State / Postcode and the warning referring you to the PDS saying ATO requires you to be in Australia at the time of applying. The guy from the super company was saying your choice to proceed but he reckons he got advice from "the team" to say it was sketchy tax wise. I don't think the Super company gives a rats. It is actually an ATO stipulation, not the Super companies requirement. I am just worried the ATO will know I wasn't in the country when applying and possibly down the track I will get hit for the 15% I saved and the super company didn't keep. They do know exactly where you are these days with links to everywhere and your passport details. If you think its not a problem let me know, still keen to do it

[KhunHeineken]

 

17 hours ago, Kenny202 said:

The 32% on withdrawals Superannuation completely false.

You misread or misunderstood.  I never said there was 32.5% tax to pay on withdrawing money from your Super fund. 

 

This is what you said in your OP.

 

"I have already made a first small withdrawal a year ago and in that time the money has earned interest." 

 

I am gathering that interest was earned in a bank account.  Therefore, "interest" was earned outside of your Super fund, right?

 

You then said this:

 

" I am just wondering if the interest I have accrued after making an initial and further withdrawals is taxable?" 

 

The interest your withdrawn Super earns in a bank account is income, therefore, taxable.  If you are a non resident for tax purposes, it's taxable at 32.5%. 

 

This is also what another member, gearbox, said:

 

"If your money is outside super then the non resident rules for interest apply."

 

This is what you also said:

 

"It is a fairly small amount anyway, probably under the tax free thresh hold although I been here a long time now and non resident for tax purposes."

 

If you are a resident for tax purposes, you have the benefit of the tax free threshold.  If you are a non resident for tax purposes, there is no tax free threshold.  I have posted the non resident tax brackets.  It's 32.5% for $0 to $120,000.

 

You seem to think that money taken out of Super can not be taxed because it came from a Super fund.  This is laughable. 

 

Once you withdraw money from Super, and have that money "earn" elsewhere, like interest in a bank, rent from a property etc, it's income, and if a non resident, taxable at 32.5%.

 

Basically, once you withdraw money from your Super fund, it's the same as any other money. Eg. savings. 

 

I can't make it any clearer.    

[KhunHeineken]

18 hours ago, Kenny202 said:

32% as a non resident is worst case scenario if you have money invested with a bank etc

Isn't that where your withdrawn Super money earned the "interest" that you mentioned in your OP? 

 

You said:

 

"I have already made a first small withdrawal a year ago and in that time the money has earned interest. "  Where did you earn this "interest" from if not in a bank? 

[KhunHeineken]

17 hours ago, gearbox said:

Use VPN and set your VPN proxy to be in Australia, otherwise they may block your pension stream application. AFAIK this requirement may be invented by your fund....never heard about this requirement.

 

The AML/KYC rules are getting tightened, I got a credit card application put on hold by HSBC Australia, as I applied online from Thailand. Use always VPN when dealing with the banks, financial institutions and the government.

Risky. 

[KhunHeineken]

16 hours ago, Kenny202 said:

The processing of the online form not a problem. I am sure I could've completed it and converted to pension stream as fa as the Super company concerned. The only reason I noticed it was when it came up with a space for Australian address  / State / Postcode and the warning referring you to the PDS saying ATO requires you to be in Australia at the time of applying. The guy from the super company was saying your choice to proceed but he reckons he got advice from "the team" to say it was sketchy tax wise. I don't think the Super company gives a rats. It is actually an ATO stipulation, not the Super companies requirement. I am just worried the ATO will know I wasn't in the country when applying and possibly down the track I will get hit for the 15% I saved and the super company didn't keep. They do know exactly where you are these days with links to everywhere and your passport details. If you think its not a problem let me know, still keen to do it

You have answered your own questions.

 

Yes, the Super company doesn't care. 

 

Yes, you need to be in Australia at the time to benefit from being a resident for tax purposes. 

 

Yes, the ATO know you are outside of Australia.  They may not know which country you are in, but that is irrelevant to them.  This will most likely trigger some more inquiries, and when they see you haven't been in Australia for, in your own words, "a long time" you will be deemed a non resident for tax purposes which MAY open up a big can of worms for you.

 

The guy from the Super company told you it's "sketchy tax wise."  I am saying it's risky.

 

A VPN can't get around immigration records. 

[Kenny202]

4 replies all saying the same rhetorical stuff that we already know? Really? Are you bored?

 

I did write the OP in a misleading way where you thought, or it may have looked like I was talking about tax on interest I earned from money I withdrew from super and invested elsewhere. I didn't actually mean that. I spend the money I withdraw. I was talking about the money that is actually accruing interest IN super. My bad. I think they refer to it as earnings rather than interest.

 

You do realize being a non resident for tax purposes has nothing to do with Super unless you withdraw it and invest it somewhere else, and even then you can tell the bank to with hold 10% of your interest earnings and you are completely covered / tax paid. The problem is quite a few banks wont accept investments from declared non residents...U bank for one.

 

Normal tax on super earnings is 15% resident or non resident and with held by the Super company and paid to the ATO.

 

You don't have to be a resident for tax purposes to convert to a pension stream.... you simply have to be in Australia when you apply and when the Super company approves the change. Super and pension streams have nothing to do with residents or non residents for tax purposes. A trip back to Oz would cover that should it be worthwhile. I have clarified that with super company and my accountant.

 

The 32% non residents tax is worst case scenario...say for example I was earning money in another country. I am a registered non resident for tax purposes by the way and as far as I know there is no big can of worms?

 

You mix captain obvious statements with clearly incorrect / misleading statements, and this could be misleading to others reading this post that may benefit / by seeking the same advice.

 

 

[gearbox]

On 5/29/2024 at 6:57 PM, Kenny202 said:

The processing of the online form not a problem. I am sure I could've completed it and converted to pension stream as fa as the Super company concerned. The only reason I noticed it was when it came up with a space for Australian address  / State / Postcode and the warning referring you to the PDS saying ATO requires you to be in Australia at the time of applying. The guy from the super company was saying your choice to proceed but he reckons he got advice from "the team" to say it was sketchy tax wise. I don't think the Super company gives a rats. It is actually an ATO stipulation, not the Super companies requirement. I am just worried the ATO will know I wasn't in the country when applying and possibly down the track I will get hit for the 15% I saved and the super company didn't keep. They do know exactly where you are these days with links to everywhere and your passport details. If you think its not a problem let me know, still keen to do it

Hi, could you provide a link or attach a blank form where it says you have to be in Australia to start pension income stream with your super. I would like to research this a bit more as I'm starting my pension income stream in around an year.

[Kenny202]

1 hour ago, gearbox said:

Hi, could you provide a link or attach a blank form where it says you have to be in Australia to start pension income stream with your super. I would like to research this a bit more as I'm starting my pension income stream in around an year.

 

PM sent. Let me know how you go 🙂

[KhunHeineken]

5 hours ago, Kenny202 said:

I did write the OP in a misleading way where you thought, or it may have looked like I was talking about tax on interest I earned from money I withdrew from super and invested elsewhere.

You don't say. 

 

5 hours ago, Kenny202 said:

I was talking about the money that is actually accruing interest IN super. My bad.

One question.  If you were talking about interest earn within Super, why mention the withdrawals from your Super and the interest that those withdrawals earned at all???? 

 

The rest of your post I know this information.  I can only go on the words your write, and I have quoted you, twice. 

 

The misleading way you posted, as admitted by yourself, doesn't make my information to you wrong, or false, as you claim.

[TroubleandGrumpy]

On 4/8/2024 at 10:24 PM, Kenny202 said:

Not really sure what you mean by pension phase. I am not on the pension as I live outside the country but I am retired and have filled out the declaration. I haven't converted my Super into a pension type fund as of yet in fact I was told that can have tax implications.

My money has been in the same super account / fund for years while I was working and since I left work. I reached maturity age last year...made a small withdrawal and left the balance of the money in the super fund which is accruing interest. I have just withdrew another small amount. I checked at the time and if I withdrew the total amount of super at maturity age no tax was payable.

So is that correct? As long as I leave my money in the original super account, any interest earned on the balance now and in the future is non taxable even if I make withdrawals? Is this what you mean by pension phase or am I in the accumulation phase?

Many thanks for your help 🙂

There are 2 'phases' in Super in Aust.  Accumulation and Pension.  During 'accumulation' the Fund is paying 15% tax on all earnings across all funds in accumulation phase. During 'pension' the Fund is not paying that 15% tax. If you switch to 'pension phase' the money is not taxed and is therefore technically taxable if you are a tax resident of another country. But it is not taxable in Australia whether you are in accumulation or pension phase, or whether you are a tax resident or not. You cannot stay in accumulation phase when you turn 75 - not sure the exact rules and limits etc.

 

Many many complications -  such as proving how much tax you paid on the Super earnings (less fees and costs), because the Funds do not report on an account basis. Likewise, they will not report on any date period other than July to June.  The same thing applies to ATO - and yes I have approached and formally requested both of them - denied.  Under DTAs etc., the tax paid on Super earnings is deductible here - but the proving of that will be extremely hard if not impossible.  IMO best to say nothing and hope that Thailand will exclude earnings that have been subjected to the taxation system of another country with which it has a DTA. After all, the rule was changed by TRD because of Thais investing overseas and not paying taxes there (not tax residents there), and then bringing it back tax free into Thailand. 

Edited June 3 by TroubleandGrumpy

[Kenny202]

4 minutes ago, TroubleandGrumpy said:

There are 2 'phases' in Super in Aust.  Accumulation and Pension.  During 'accumulation' the Fund is paying 15% tax on all earnings across all funds in accumulation phase. During 'pension' the Fund is not paying that 15% tax. If you switch to 'pension phase' the money is not taxed and is therefore technically taxable if you are a tax resident of another country. But it is not taxable in Australia whether you are in accumulation or pension phase, or whether you are a tax resident or not. You cannot stay in accumulation phase when you turn 75 - not sure the exact rules and limits etc.

 

Many many complications -  such as proving how much tax you paid on the Super earnings (less fees and costs), because the Funds do not report on an account basis. Likewise, they will not report on any date period other than July to June.  The same thing applies to ATO - and yes I have approached and formally requested both of them - denied.  Under DTAs etc., the tax paid on Super earnings is deductible here - but the proving of that will be extremely hard if not impossible.  IMO best to say nothing and hope that Thailand will exclude earnings that have been subjected to the taxation system of another country with which it has a DTA. After all, the rule was changed by TRD because of Thais investing overseas and not paying taxes there (not tax residents there), and then bringing it back tax free into Thailand. 

I assume we are covered on two fronts as far as taxable in Thailand goes....at least super in the accumulation phase

 

1) Tax had been paid already

2) DTA between Australia and Thailand

 

Tax deductions should be shown in your statements

I have no intention of lodging a tax return here 🙂

[TroubleandGrumpy]

28 minutes ago, Kenny202 said:

I assume we are covered on two fronts as far as taxable in Thailand goes....at least super in the accumulation phase

 

1) Tax had been paid already

2) DTA between Australia and Thailand

 

Tax deductions should be shown in your statements

I have no intention of lodging a tax return here 🙂

No - they are not on your statements - sorry, but no they are not.

All I got was an official letter from Fund and ATO Statement that 15% tax is paid on Super earnings for ALL accounts in accumulation.

 

The DTA is only a possible means to get tax relief here - it is not a certainty and it has to be claimed and accepted by TRD.

But like you - I have absolutely no intention of ever lodging a tax return in Thailand.

If any Expat is caught and gets fined/jailed for a minor breach (not tax fraud), then I and many others will immediately leave Thailand.

 

Many potential problems - but the biggest one IMO is that Somchai the TRD Official has more autonomy and authority to make any decision he decides, than Pornchai the IO in the Immigration Office. Somchai can decide how much income tax you have to pay based on your lifestyle, house, car, assets etc. You can appeal - but you have 7 days to pay, and only after paying can you appeal - in Thai. Good luck with that. 

 

[Kenny202]

1 minute ago, TroubleandGrumpy said:

No - they are not on your statements - sorry, but no they are not.

All I got was an official letter from Fund and ATO Statement that 15% tax is paid on Super earnings for ALL accounts in accumulation.

 

The DTA is only a possible means to get tax relief here - it is not a certainty and it has to be claimed and accepted by TRD.

But like you - I have absolutely no intention of ever lodging a tax return in Thailand.

If any Expat is caught and gets fined/jailed for a minor breach (not tax fraud), then I and many others will immediately leave Thailand.

 

Many potential problems - but the biggest one IMO is that Somchai the TRD Official has more autonomy and authority to make any decision he decides, than Pornchai the IO in the Immigration Office. Somchai can decide how much income tax you have to pay based on your lifestyle, house, car, assets etc. You can appeal - but you have 7 days to pay, and only after paying can you appeal - in Thai. Good luck with that. 

 

My statements do have tax deductions shown but it is very obtuse with little explanation. I think something like tax / sundries or something like that. I know because was directed to it by the super consultant I was discussing it with online. The reason it would be impossible to get a full breakdown is it is recalculated every moment the earnings rise and fall

[KhunHeineken]

On 6/3/2024 at 2:56 AM, Kenny202 said:

I assume we are covered on two fronts as far as taxable in Thailand goes....at least super in the accumulation phase

 

1) Tax had been paid already

2) DTA between Australia and Thailand

 

Tax deductions should be shown in your statements

I have no intention of lodging a tax return here 🙂

How about tax on the interest earned on the money you withdrew from your Super? 

[TroubleandGrumpy]

Another argumentative troll post. Seriously?

[Kenny202]

He just can't let it go lol. Attention disorder