International Retirement
International Retirement Structures - Tax Effective Saving & Investment for Australians and other Nationalities
Superannuation structures within Australia provide a tax effective environment within which to save for retirement. However, it provides a low tax environment only within an Australian context - with both contributions and earnings still attracting tax.
Depending upon your personal circumstances - including the host country in which you are located, whether you intend to pursue a long term expatriate career, your projected contribution levels and your retirement plans - it may be very beneficial for you, and your employer, to consider participation in an International Retirement Plan.
The benefits of participation in an International Retirement Plan typically include:
- Investment earnings being generated in a low, or no tax, regime.
- Portability, with expatriates potentially remaining members of a single fund throughout their working life in a variety of offshore locations.
- Flexibility to allow the expatriate to choose their own investment funds, or for an employer to appoint an investment manager.
- Relatively simple, outsourced, online administration for employers which still allows them to determine vesting and retirement guidelines
- Balances accruing in any qualifying Plan not being included in your RBL’s for Australian taxation purposes
Whether you are an Australian, or another nationality, one example of a structure specifically designed to accommodate international retirement savings and investments is Interretire (www.interretire.com). The Interretire site also contains information on the tax impact of offshore investing for a range of nationalities - including investors who are Australian, British and American.
Before deciding to pursue such an option - whether as a substitute for Australian superannuation or as a "top up" in addition to contributing to those funds - you must receive appropriate professional advice to ensure that there is an appropriate fit for your circumstances.
If you ask why participation in these structures might be preferred to simply maintaining an overseas investment account, there are a number of tax planning advantages associated with foreign superannuation funds. If the superannuation fund is properly set up, on return to Australia the member's benefits can remain offshore and continue to grow tax free - whereas simple investment accounts will normally attract taxation under the Foreign Investment Fund provisions, including taxation of unrealised capital gains.
Broadly, to qualify for these tax-planning advantages, the fund must fulfill the requirements of an "employer-sponsored foreign superannuation fund". These funds are specifically provided for within Australian legislation, which require that the fund must be:
- Employer sponsored
- Foreign, and
- A superannuation Fund
Although an expatriate's participation in an "employer sponsored foreign superannuation fund" may be very beneficial, and the requirements are not extraordinarily burdensome, we stress that professional advice should be sought prior to participation to ensure that all the legal requirements are met. Professional advice may be obtained through the Inquiry Form at the end of this page or through any appropriately qualified tax agent in Australia.
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