Is accruing interest on super after retirement taxable?

[KhunHeineken]

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?

11 hours ago, Kenny202 said:

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

They were your words.  I quoted your own words, twice. 

 

Once again, if you were talking about money inside Super, why say this: 

 

"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?"  

 

Why mention this if all you were talking about was money inside Super.

 

You are embarrassing yourself now. 

[KhunHeineken]

12 hours ago, TroubleandGrumpy said:

Another argumentative troll post. Seriously?

No.  Just quoting the OP, and he is back flipping. 

[Pattaya57]

On 5/30/2024 at 11:27 AM, KhunHeineken said:

The interest your withdrawn Super earns in a bank account is income, therefore, taxable.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%. 

I just want to correct this as you have said it several times.

 

If an Australian non-resident for tax purposes your bank will deduct a 10% withholding tax on all interest.  That's the end of it as any interest earned is not required to be included in any tax return (I still have to file a return for property rent).

 

By the way, as of 1 July 2024 non-resident tax is reduced from 32.5% to 30% ($0 - $135k)

[Kenny202]

4 minutes ago, Pattaya57 said:

I just want to correct this as you have said it several times.

 

If an Australian non-resident for tax purposes your bank will deduct a 10% withholding tax on all interest.  That's the end of it as any interest earned is not required to be included in any tax return (I still have to file a return for property rent).

 

By the way, as of 1 July 2024 non-resident tax is reduced from 32.5% to 30% ($0 - $135k)

That is correct re the banks deducting the 10%, very difficult in my experience to find a bank that will do it though. Ubank wont and as soon as you tell them you are a non resident they wont even open an account for you. Shame their non secured accounts have excellent interest, currently 5.5%

[Pattaya57]

On 5/29/2024 at 5:25 PM, 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?

I'm taking my pension next year so had been researching doing it as a non-resident. I've just looked again at my 60 page Super pension doc and all application forms and nothing says I have to actually be in Australia to submit the application?

 

As you said, application can all be done online so I was planning to do it from Thailand. Is anyone else aware of this requirement to physically be in Australia to apply?

 

I did notice another potential trap though. The application requires copies of 2 of 3 documents as proof of ID. Passport, Medicare Card or Aussie Drivers licence. My Medicare card has expired but I have the other 2. My Mate doesn't though as his Aussie licence and Medicare have expired.

[Kenny202]

I actually posted an enquiry on the ATO forum. Very simple question. Can a non resident for tax purposes convert a super account to a pension stream and if so does that person need to be physically in Australia to apply. At first a consultant replied and said they would find out. Came back later and said I need to submit my enquiry by written mail aka too hard basket. I am with Colonial and even they couldn't give me a straight answer but there online app does state you need to be a resident for tax purposes and later in the application says you need to be in Australia when lodging the application and at the time the super company accepts it. I could have probably completed the application (I can use my sons address) I wasn't worried so much about the Super company as much as the tax issues and possible future fines and back payments. I still don't know if it is a n ATO requirement or super company requirement and seemingly neither do they

 

[Pattaya57]

^ If you can't get a straight answer than I would consider it not required. I'm with Australian Super and their declaration on application form only says:

 

"I confirm I am either an Australian citizen/permanent resident, a New Zealand citizen or I hold an eligible retirement visa (subclass 405 or 410)"

 

No mention anywhere in my application pack that I have to be in Australia

[Kenny202]

57 minutes ago, Pattaya57 said:

^ If you can't get a straight answer than I would consider it not required. I'm with Australian Super and their declaration on application form only says:

 

"I confirm I am either an Australian citizen/permanent resident, a New Zealand citizen or I hold an eligible retirement visa (subclass 405 or 410)"

 

No mention anywhere in my application pack that I have to be in Australia

Well there is another thing I found...no mention of it on their paper application...only online application. I thought maybe it had something to do with money laundering laws or something. I seem to remember seeing it somewhere though for Australian Super when I googled it. I actually sent it to someone else who asked me about it. Here it is here, not sure if this is online or just their blurb. It is actually from Australian Super

 

 

[Pattaya57]

5 minutes ago, Kenny202 said:

Well there is another thing I found...no mention of it on their paper application...only online application. I thought maybe it had something to do with money laundering laws or something. I seem to remember seeing it somewhere though for Australian Super when I googled it. I actually sent it to someone else who asked me about it. Here it is here, not sure if this is online or just their blurb. It is actually from Australian Super

 

 

That's the same statement that I mentioned above. It says "Australian citizen/permanent resident". That's nothing to do with being a "non-resident for tax purposes" and it doesn't say you have to be in Australia to apply? 

 

(Permanent Resident is someone immigrated to Australia but not yet applied for citizenship)

 

Edited June 22 by Pattaya57

[Pattaya57]

I am surprised at the number of retired friends that delayed transferring their Super to a pension-income fund. A standard Super fund is in accumulation phase and all earnings are taxed at 15%. However if you are retired and 60 you can transfer it to a Pension-Income fund that has all fund earnings tax free, as is the income paid

 

Simple math says a $250k fund could have earnings of $20k per year (8%) and therefore $3k tax on earnings. So for every year you don't take pension you're losing $3k to the tax man

 

Unless I'm missing something, I'll be transferring to pension-income fund the day I turn 60 (next year)

 

Edited June 22 by Pattaya57

[rhodie]

30 minutes ago, Pattaya57 said:

I am surprised at the number of retired friends that delayed transferring their Super to a pension-income fund. A standard Super fund is in accumulation phase and all earnings are taxed at 15%. However if you are retired and 60 you can transfer it to a Pension-Income fund that has all fund earnings tax free, as is the income paid

 

Simple math says a $250k fund could have earnings of $20k per year (8%) and therefore $3k tax on earnings. So for every year you don't take pension you're losing $3k to the tax man

 

Unless I'm missing something, I'll be transferring to pension-income fund the day I turn 60 (next year)

 

I'm no expert, but just research as I think you will find that when your money is in pension phase your charges increase thereby making the tax gain negligible. I did confirm that I could move my super back into a accumulation phase if I wanted to or split.

 

Of course this could have only applied to the company I'm with. Good luck.

[Pattaya57]

18 minutes ago, rhodie said:

I'm no expert, but just research as I think you will find that when your money is in pension phase your charges increase thereby making the tax gain negligible. I did confirm that I could move my super back into a accumulation phase if I wanted to or split.

 

Of course this could have only applied to the company I'm with. Good luck.

I'm in the "balanced fund" in Australian Super and from what I can tell my new pension-income account stays invested in the "balanced-fund" (if I choose) so same earnings return and same fees. Only difference is earnings are not taxed at 15% and I recieve my choice of tax free income between 4% and 10% of fund balance per year.

 

There is a 0.06% transaction cost that I guess may be applied to my income payments but that's insignificant compared to 15% tax on earnings in current fund

 

Edited June 22 by Pattaya57

[Kenny202]

2 minutes ago, Pattaya57 said:

I'm in the "balanced fund" in Australian Super and from what I can tell my new pension-income account stays invested in the "balanced-fund" (if I choose) so same earnings return and same fees. Only difference is earnings are not taxed at 15% and I recieve my choice of tax free income between 4% and 10% of fund balance per year.

That's what I was told by my fund. Not that I would trust them but when they checked while I was talking to them on line no appreciable difference in fees.

[KhunHeineken]

On 6/22/2024 at 4:37 AM, Pattaya57 said:

I just want to correct this as you have said it several times.

 

If an Australian non-resident for tax purposes your bank will deduct a 10% withholding tax on all interest.  That's the end of it as any interest earned is not required to be included in any tax return (I still have to file a return for property rent).

 

By the way, as of 1 July 2024 non-resident tax is reduced from 32.5% to 30% ($0 - $135k)

You are correct, but most have some diversification.  I too, have rental properties. 

 

The interest may attract 10%, but the income from other investments doesn't.  It's the full whack. 

 

Yes, I posted in a different thread about the changes to the non resident tax brackets.  I was surprised to see the change. 

 

Interestingly, no tax free threshold added though.  With the proposed changes to tax residency on the way, if they weren't after the "small fish" you would think a tax free threshold would be added along with the other bracket changes for the 1st July 2024 changes, alas, not to be.  What's that tell you? 

[KhunHeineken]

On 6/22/2024 at 5:26 AM, Pattaya57 said:

I'm taking my pension next year so had been researching doing it as a non-resident. I've just looked again at my 60 page Super pension doc and all application forms and nothing says I have to actually be in Australia to submit the application?

 

As you said, application can all be done online so I was planning to do it from Thailand. Is anyone else aware of this requirement to physically be in Australia to apply?

 

I did notice another potential trap though. The application requires copies of 2 of 3 documents as proof of ID. Passport, Medicare Card or Aussie Drivers licence. My Medicare card has expired but I have the other 2. My Mate doesn't though as his Aussie licence and Medicare have expired.

In relation to the aged pension, that's the whole "in person" and "portability" discussion. 

 

As for your Super, I'm not aware of a requirement to be inside Australia at the time.

 

Interesting about the ID.  With no secondary ID, I guess some would have to return to Australia in order to arrange 100 points of ID, just to unlock their own money in Super.  A waste of time and money, but it is what it is.     

[KhunHeineken]

On 6/22/2024 at 9:20 AM, Pattaya57 said:

That's the same statement that I mentioned above. It says "Australian citizen/permanent resident". That's nothing to do with being a "non-resident for tax purposes" and it doesn't say you have to be in Australia to apply? 

 

(Permanent Resident is someone immigrated to Australia but not yet applied for citizenship)

 

Agree.

 

"Permanent Resident" is not the same as "Tax Resident."  Two different things.