Foreign superannuation are funds created outside of New Zealand to provide retirement benefits to individuals.
Periodic payments and lump sum withdrawals or transfers
Your foreign superannuation transactions will be taxed differently depending on:
- your type of transaction
- if a double tax agreement applies.
For lump sum withdrawals or transfers, you might also qualify for a 4-year tax exemption.
| Type of transaction | How you're taxed |
|---|---|
|
Regular payments from pensions or annuities |
You'll need to pay tax on these amounts when you file or approve your tax return. |
|
Lump sum withdrawals |
If you have superannuation interest from a foreign investment fund (FIF), you'll need to use FIF rules. If you do not have superannuation interest from a FIF, you can use either the:
|
|
Lump sum transfers |
You can use either the:
|
|
Lump sum withdrawals or transfers from Australian superannuation |
You will not be taxed on withdrawals or transfers from an Australian superannuation. |
Foreign investment funds (FIFs)
Double tax agreements
Keep in mind that a double tax agreement (DTA) may be in place between New Zealand and the country or territory where you have foreign superannuation. You, or a tax professional, will need to check because DTAs can affect how you're taxed on your foreign superannuation transactions.
Tax on lump sums begins after 4 years
A 4-year tax exemption can apply to lump sums. You will not have to pay tax in the exemption period for the lump sum you receive.
The exemption period:
- starts from the date you become a New Zealand tax resident and runs for 4 years
- is not available for foreign super acquired while you were a New Zealand tax resident.
If you become a non-resident within 4 years of becoming a tax resident, the exemption only applies from the date you became a resident until when you became a non-resident again.
This 4-year tax exemption applies only to foreign superannuation. There is another temporary tax exemption of the same name and timeframe but with different conditions and effects. It comes up when working out your international tax situation.
International tax for individuals
Schedule method
The schedule method is the default option when calculating lump sum amounts of your foreign superannuation.
Under this method you pay tax on a percentage of the lump sum. The percentage varies depending on how long you've been a New Zealand tax resident.
Formula method
The formula method is complex. To use it, we recommend getting advice from a tax professional.
Under this method, you are taxed on the actual gains of your foreign superannuation interest. This tax is between when your 4-year exemption expires and the date you get the lump sum.