New Zealand’s Finance Minister, Bill English, has confirmed that legislation allowing New Zealanders returning home from Australia to bring their retirement savings with them will be introduced to Parliament this month.
New Zealand and Australia's memorandum of understanding on retirement savings was signed in July this year. Currently, when New Zealanders work in Australia and move back, their compulsory retirement savings are left behind. The savings are locked into the Australian superannuation scheme until the saver reaches retirement age.
The Australian Taxation Office estimated last year it had about AUD13bn (USD11.8bn) in the 'lost' accounts in the Australian superannuation system, with a huge proportion of the money belonging to New Zealanders.
Under the portability agreement, tax-exempt transfers will be allowed between certain Australian superannuation funds and New Zealand KiwiSaver funds - and vice versa. The transfer of retirement savings between the two countries will be exempt from entry and exit taxes.
Under current tax laws, transferring savings from Australia to New Zealand may be regarded as a taxable dividend. The proposed legislation will ensure this does not happen.
Participation will be voluntary and, providing the necessary law changes are made in Australia, it is envisaged that the new arrangements will take effect in the second half of next year.
"This is an important step forward for our wider Single Economic Market programme with Australia, particularly in helping the free movement of labour between the two countries," English announced.
"In particular, it will allow New Zealanders and Australians to consolidate their financial affairs in the country in which they live," he added.
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