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IRD to start chasing tax

IRD E1456792792689

 

  • The IRD estimate 70% of NZ residents who have transferred a pension after 1 January 2000 have a tax liability
  • There is a limited window left to declare under an amnesty to potentially reduce your tax bill on the transfers
  • If you don’t declare under the amnesty the IRD are about to ask you why – and they have been building a list of all transferees

 

The IRD estimate that 70% of people that transferred their pensions from overseas to New Zealand since 1 January 2000 have not complied with their tax obligations. The probable reason that so many did not comply is because of very complicated rules at the time.
 
The most complex factor was that even if you were not receiving your pension you still potentially had a tax liability. That’s right – if your pension grew in value then that growth could have created a tax liability, even though you could not access the pension to pay the tax. And the IRD did not discriminate between final salary pensions or contributory pensions, it was your job to get a valuation each year, determine your tax liability, declare and pay it.
 
Many of the wrinkles in this system got smoothed out with simplified changes on the 1st of April 2014, but to make up for the massive non-compliance during the 14 or so years prior the IRD gave those that that had already transferred their pensions to New Zealand the opportunity to take a one off tax hit on their previous transfers.
 
This concession came to an end in the tax year ending 31 March 2015 and states that if you have transferred your pension to New Zealand at any time after 1 January 2000 then you need only declare 15% of that transfer as income and pay tax on it if you had not applied the previous tax rules.
 
Now the IRD are preparing to check for prior non compliance as people are filing their own tax returns will now only have until 7 July 2015 to declare their pension transfers and receive this concessional tax rate. If people do not the IRD can go back and work out their previous tax position and order them to pay penalties and interest. The IRD will chase tax on pension transfers and they are preparing lists of people to go after right now.
 
Given there are a only small number of New Zealand Superannuation schemes that qualify to receive pension transfers, it will not be hard for the IRD to ascertain who has transferred their pensions and when. This will provide an excellent starting point for the IRD to compare your personal tax position with what should have been returned under the concession or previous rules. It may well be that anyone not matching up as having paid under the concession or declared under the previous rules will receive a ‘please explain’ notice from the IRD.
 
If you transferred your pension after 1 January 2000 we strongly recommend that you contact us immediately. Again the IRD will chase tax on pension transfers – ensure that yours is not one of them.

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NZ free phone:0800 102 599 / OZ Free Phone:1800 857 410 / Email:info@qropsnz.com

very stress free

Thank you Cambel for your help and guidance throughout this process in getting my pension transferred (very stress free for me). It is greatly appreciated and I would certainly recommend you and Charter Square to others who are interested in transferring their pension.

David R, New Zealand

You guys rock!

I just wanted to say a great big thank you to you and your team. You are all totally awesome. I received a cheque yesterday from the Prudential to apologise for the ‘recent inconvenience’ that I had experienced. Thank you for doing this for me. You guys rock!

Noelle B, New Zealand

professional, insightful

Charter Square were professional, insightful and a pleasure to work with. They rose to the challenge of consolidating my overseas pensions and bringing them home with minimum fuss for me and maximum effort on their part.

Jens H, New Zealand

thorough, professional and prompt

Very thorough, professional and prompt service from the team at Charter Square. Thanks for making the bewildering world of pension transfers super simple.

Jules T, New Zealand

Best party to deal with

Thank you kindly for keeping in touch with me. For now, I will not be moving my pension. I will however be keeping your details and referring back to you when I wish to pursue. You by far are the best party to deal with, no nonsense, professional and in my opinion genuine. I do sincerely thank you for your advice to date.

GE, New Zealand

Freedom

Securing the freedom to use savings that are actually ours to work with has been stressful in the extreme. While I never planned on giving up there were many times when the current (UK) holder made the whole process seem well beyond my determination and ability. It’s easy to look at the 36 month history of this claim with the benefit of hindsight, but the conclusion is that employing Charter Square in the first instance would have been wise had I been able to anticipate the red-tape that appears to have been deliberately created to stall access.

CP, Auckland
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