Issue 583, 29 October 2015
QROPS update: no blanket relief for transfers after 5 April 2015
As advised in ASFA Action issue 576, Treasury has been engaging with the United Kingdom (UK) government and its tax authorities regarding relief options for members impacted by recent rule changes for Qualifying Recognised Overseas Pension Schemes (QROPS). These changes have had the effect that most Australian superannuation funds, which were previously QROPS lost that status with effect from 6 April 2015.
Further background on this matter, including the potential tax penalty for members under age 55 whose benefits were transferred from a UK scheme to an Australian fund after 5 April 2015, can be found in ASFA Action issues 569, 571, 574 and 578.
Treasury has now informed ASFA that it has received a response from Her Majesty’s Revenue and Customs (HMRC) addressing some of the concerns it had raised.
In particular, Treasury has been advised that HMRC cannot provide blanket relief for all transfers made to former QROPS between 6 April (the effective date for the rule change) and 2 July 2015 (the date HMRC updated its QROPS list to remove most Australian funds). However, HMRC can consider not collecting the tax owed by affected individuals on a case-by-case basis, looking at “what is the best means of obtaining for the national exchequer the highest net return that is practicable having regards to the staff available to them and the cost of collection”.
The decision on relief will depend on the facts in each case, and HMRC has advised that until it receives details in respect of all the transfers that took place after 5 April 2015, it will not be able to put the case to the Revenue Commissioners to consider not collecting the tax.
Treasury is presently clarifying with HMRC the specific details that Australian funds will be required to lodge with HMRC, on behalf of impacted members, to request relief. Once this information is available, ASFA will provide a further update via another ASFA Action.
Members wishing to discuss QROPS should contact Fiona Galbraith.
