Speak with an Australian Expat Financial Adviser

Once an Australian resident reaches age 60 and meets a valid condition of release to access their Australian superannuation, any withdrawal from the account is generally tax-free. The only exception to this is for those superannuation funds which may have an ‘untaxed element’ in their fund account.

Australian superannuation has two distinct phases; the accumulation phase and the pension phase. In the accumulation phase (those members under age 60), investment earnings such as capital gains, dividends, and interest are taxed in the fund at a concessional tax rate of up to 15%. In the pension phase, investment earnings on the first $1.9 million are not subject to tax. To enter the pension phase, one must use their existing superannuation benefits to commence an Account-based Pension (ABP). This makes superannuation one of the most tax-effective structures for Australians to preserve their wealth in retirement.

Withdrawals from overseas retirement accounts may be subject to tax with the Australian Tax Office (ATO) in certain circumstances under the Foreign Investment Trust rules. Timing of the withdrawals is critical to determining the tax implications with the ATO. For this reason, care should be taken when the withdrawals are made and strategies with a Financial Adviser may be beneficial. Where a withdrawal from an overseas retirement account is taxable in Australia, a foreign tax credit (FTC) is generally available to offset part of the tax.

Australia has Income Tax Treaties with many countries including the United States of America. The Australia-USA Double Tax Agreement (DTA) provides that Social Security payments by the USA to a resident of Australia shall only be taxed in the USA and not assessed as taxable by the Australian Tax Office (ATO). US social security payments can complement your retirement planning in Australia and potentially limit the drawdown from other financial assets to preserve them for longer.