Australian pension idea for Gordon Brown?

With a Labour Government in Australia, the question is will Gordon Brown go looking for ideas from the land of Kevin Rudd?
Suggestions have been made in the interim response from the Henry Review that there could be compulsory government annuities. Will Gordon Brown follow with his version? The answer is probably “No” if he listens to the recommendation of Australia’s Investment and Financial Services Association (IFSA). They are concerned that such innovations could be damaging as Australia, like the UK, has an ageing population.
Would such a programme cause lower paid workers to subsidise wealthier Australians? It looks like a compulsory government annuities scheme would need Australians to dispatch all or part of their superannuation savings to the Government when they retire. And then the government would determine a permissible annual draw down.
But we all know that manual labourers do not live as long as white collar workers. So if the UK ever adopted Government-run annuities scheme, then it would be a winner for those who live longer, subsidising those who have a shorter life.
The Henry review, to which Montfort International was an overseas contributor, is ongoing review of Australia’s tax system launched in May, 2009 with results expected before December 2010.

New incentive for Australian residents to declare offshore income

The net is closing on those who live in Australia and who have undeclared overseas assets, pensions, ISA’s, shares or foreign pension schemes.
Australian Tax Commissioner Michael D’Ascenzo’s urges Australian residents who may not have declared all income from offshore activities to “do the right thing to get their tax affairs in order” by 30 June 2010.
According to Geraint Davies, Managing Director of Montfort International, Australia is not alone. ‘Qualifying Recognised Overseas Pension Schemes (QROPS) have been seen as the solution to the taxation issues created by non-declaration of UK pension schemes to foreign jurisdictions, but this is not necessarily the right move. In fact some people may have exempt income so suitable financial advice for the country of residence is an absolute must.’
“Australia has highly sophisticated processes and systems to trace fund flows around the world and they are getting better at it,” says Davies. “Banks and other overseas tax jurisdictions can easily identify people with undeclared income. What were once considered highly complex and sophisticated arrangements to dodge liability now provide easy pickings.”
Australia has tax information exchange agreements with nine countries and more will soon follow. With over forty overseas jurisdictions having signed a Double Tax Agreement with Australia, only the most naïve will want to make a non-declaration stance with the Australian Taxation Office (ATO). The ATO matches data supplied by overseas revenue agencies, financial institutions and AUSTRAC with income tax returns to identify undeclared foreign income and to identify Australian residents involved in foreign transactions.
In 2007 the ATO made a similar offer and as at 31/10/09 more than 3,000 disclosures had been made, totalling over $306 million in omitted income and raising nearly $65 million in liabilities.
“Tax advisers have told us of clients with undisclosed foreign income want to come forward to set things right, but are concerned about the consequences of doing so, particularly the potential for criminal investigation,” Mr D’Ascenzo said.
“People can now approach us anonymously for an indication of whether we would initiate an investigation to determine whether there is a potential breach of the criminal law. In making this decision, we will often seek advice from an appropriately qualified panel which will include external members’
“This offer is not valid if we commence an audit so I remind people again — contact us before we contact you. There’s a much higher price to be paid later if we discover undeclared income through an audit process. Penalties can be as high as 90 per cent, and we will seek prosecution in serious cases. There is nothing wrong with holding an offshore account or investing overseas as long as you pay any Australian tax due, however we will continue to focus on the misuse of offshore financial arrangements.”
The new offer doubles the shortfall penalty from 5% to 10% should a person’s additional income from offshore activities be more than $20,000 in a tax year.
There is some comfort for those with additional taxable income of $20,000 or less in a tax year as they will not have to pay a shortfall penalty for that year. This remains unchanged from the previous initiative.
For more information and assistance on structuring your finances for migration to Australia, please do not hesitate to contact the adviser team at Montfort International on 01483 202072.

Australian QROPS may cause problems for migrants

UK emigrants who have moved their superannuation to what they thought was a Qualifying Recognised Overseas Pension Scheme (QROPS) Australian superannuation scheme may have unwittingly made payments that contravened the UK rules and given their members a tax burden.
The UK HMRC (Her Majesty’s Revenue and Customs) recognize there will be teething problems in the initial stages of new regulation, but any honeymoon period could be short lived. HMRC expects schemes to own up and not wait to be found out if they have made unauthorised payments, as the UK Tax Compliance department is already onto it.
“Various Australian advisers are quite rightly telling people it’s possible to move their money into an Australian “complying fund” but the potential problems begin when they state that the member can elect for the scheme to pay any tax liabilities on growth post arrival. Some Australian pension schemes have inadvertently broken fundamental regulations.
Further instances have come to light where schemes have incorrectly advised that members can, after the first reportable lump sum, take out the lot. Rules appear to have been broken in many cases. Schemes and advisers need to take prompt advice to ensure they correct the situation as soon as possible. We are already acting as a go-between” reports Geraint Davies, Managing Director of UK financial advisory firm Montfort International plc.

Integrated Visa and Financial Advice

There are many things to consider when migrating to Australia. One of those is the visa that you intend to enter under. Something that many migrants forget about or leave too late is that getting your finances right is just as important as getting your visa.

Both issues are important but are you getting the most from them? Perhaps the best approach would be integrated visa and financial advice. Have you looked at services that offer integrated visa and financial advice? Appropriate solutions for suitable advice depend upon the type of visa granted to you. Using an integrated visa and financial advice agent and service can ensure that the integrated visa and financial advice issues are matched up to give you the best possible start and future for your new life in Australia. Integrated visa and financial advice ensures the efficiency and effectiveness of the planning and timing of each stage of your migration to Australia is managed properly.

Integrated visa and financial advice services allow you to easily keep in touch of each stage of your visa application and accompanying advice ensuring that you are always aware of the latest developments of your integrated visa and financial advice.

Should you opt for integrated visa and financial advice agents and services? Categorically, yes. Integrated visa and financial advice is in our opinion the best solution for anyone migrating to Australia.

Pension Transfer to Australia

Should you automatically carry out a pension transfer to Australia? No. Integrated visa and financial advice services will provide you with the most appropriate advice for your pension transfer to Australia in accordance with the type of visa you are entering Australia under. If your visa and financial advice is integrated then you can be completely sure that the advice you receive for any pension transfer to Australia is of quality and a recommendation is one you should proceed with. A pension transfer to Australia is a one way thing. It cannot be transferred back.

Before employing an integrated visa and financial advice agent and service you should ensure that you employ qualified, regulated individuals that are up to date with the latest developments for integrated visa and financial advice and are also aware and informed of the latest tax and investment situation concerning a pension transfer to Australia.

Whatever your financial intentions, seeking advice early from the qualified advisers at Montfort International (info@miplc.co.uk, call 01483 202072 or freephone 0800 018 3571) before you finalise your migration plans can help you to a more comfortable retirement overseas.

UK Pension Transfers to Australia

Following last month’s u-turn by the Australian government regarding superannuation funds, temporary visa holders are again looking at transferring their pension funds to Australia.

Previously, the Australian government had proposed that temporary visa holder’s superannuation funds be held by the Australian Tax Office until the granting of a permanent visa. As a result, Montfort International had advised temporary visa holders that they should suspend their UK pension transfers to Australia until the consultation process had completed.

The consultation process has resulted in a new approach allowing for funds to remain invested in superannuation while the person is resident in Australia. As such, we are now advising temporary residents to reassess whether their UK Pension entitlements should be transferred to Australia.

In addition to uncertainty over the government’s proposals many migrants have deferred transferring their benefits to Australia due to the strength of the Australian Dollar.

Montfort International can assist clients who are concerned about exchange rate fluctuations by first transferring their pension into an arrangement which has its own bank account. This could be used to convert your investment to Australian Dollars when you are happy with the exchange rate. Any onward transfer to Australia would then be in Australian Dollars. As we have seen in the past week with the pound regaining some ground against the dollar, the exchange rate can move quickly, and this strategy ensures you would not be adversely affected by any exchange rate fluctuations at the date of transfer.

If you wish to find out more about UK Pension transfers to Australia please contact Montfort International - info@miplc.co.uk.