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What is foreign superannuation tax?

  • Foreign superannuation rules determine the tax payable on income from a pension.
  • Pensions and other similar annuities resulting from past employment paid to a New Zealand resident are taxable in New Zealand only.
  • If you lived overseas and paid into a pension scheme there, you may be taxed on the income you draw from that overseas pension.
  • There is considerable variation in the form an interest in a foreign superannuation scheme can take which can also require different tax treatment.

When is foreign superannuation tax charged?

New Zealand has ‘Double Tax Agreements’ (DTA) with over 40 countries. These agreements, in conjunction with residence status, provide the basis for deciding which country holds the rights to tax.

Providing a person first acquires an interest in a foreign superannuation scheme while non-resident of New Zealand (whether or not contributions are made to the scheme while resident), the person is taxed under the foreign superannuation rules.

Who foreign superannuation tax affects

  • Anyone resident in New Zealand who is receiving income from a pension or superannuation scheme invested overseas.
  • If you moved to New Zealand (migrated) after having worked overseas and contributed to a pension scheme.
  • Or as a New Zealand born citizen, you lived overseas for a period during your working life and made contributions to an overseas pension scheme.

An example of foreign superannuation tax in use

  • You live in New Zealand and receive income from your UK private pension plan. This is classed as income whether received into your UK or New Zealand bank account and you must include this as overseas income in your annual tax return.
  • You live in New Zealand and transferred your UK state pension into WINZ. You receive regular payments from Work and Income – they have already deducted the tax payable for you. This is not income and does not need to be included in your tax return.

Ways people get foreign superannuation tax wrong

  • If you assume that your UK pension is taxed in the UK and your New Zealand pension is taxed in New Zealand, you are probably incorrect.  Due to the Double Tax Agreement between the UK and New Zealand, you will have to apply to HMRC (UK) for a credit on the tax paid on your UK pension.
  • Overseas pensions come in two forms – private pension plans and the state pension. Often people have tax deducted at source (overseas) and they have it sent to the local tax authorities. People may forget to apply for a refund on this tax already paid. And you must also pay tax on that income here in New Zealand.

Recent changes to foreign superannuation tax

There have been no recent changes to this tax.

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