IRD hunts pension tax avoiders

IRD is asking advisers for details of people who have transferred overseas pensions to New Zealand and not paid tax on them.

Tuesday, January 13th 2015, 6:00AM

by Susan Edmunds

New tax rules came into effect last April, making all lump sum transfers of pensions taxable when they are withdrawn or transferred to a New Zealand or Australian scheme.

Those who transferred between 2000 and March 31 last year have the option of paying taxon 15% of their lump sum transferred if they include the transfer in their return for the 2014/2015 tax year.

It has been estimated that as many as 70% of people who have transferred their savings to New Zealand have not paid tax.

The IRD is now writing to QROPS providers and advisers who deal with foreign pension transfers, asking them for details of clients who have transferred money.

Alun Rees-Williams, a director of pension service Britannia, said providers had been asked for a list of transfers. “I imagine they’re looking at people who haven’t bothered putting in a return.”

He said his clients had been warned that it was likely to happen.

“We’ve made all clients aware of the tax that’s due and the concessionary tax rate…. It will affect people who’ve put their heads in the sand. There shouldn’t be many who don’t know the tax is due. We’ve always said the day was coming when the IRD would contact us because they’ve done it before.”

He said it may be something that would happen every year from now on.

An IRD spokeswoman said the department would continue to maintain its contact with providers. Inland Revenue is contacting, and will continue to contact QROPS providers to ensure that people who fall into this category are being encouraged to use this concession and bring their pensions up to date with the new compliance rules. Inland Revenue’s objective is to ensure all taxpayers understand and meet their tax obligations and we do not hold any figures as to the number of taxpayers who have not complied,” she said.

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