Shares & Funds Other countries taxing Super when living overseas?

Hi guys,

I live in Australia and I plan to retire in Montenegro. I am contributing 25k concessional contributions per year (which is maximum amount). I have enough in my portfolio outside of super to sustain our lifestyle from the retirement year until we can access super. I believe I should contribute from this point onwards all my savings solely in super (non-concessional contributions). This way I won't need to pay CGT to Australia.

Does anyone know whether Montenegro will tax my super withdrawals once I start living off them in Montenegro, when I reach 60?

Thanks

 

I have doubts that PC members include a tax adviser in Montenegro. My basic source of intenrnational tax info suggests that tax residents of the country are taxed on their worldwide income. I have no idea how they may treat super. Australia has no treaty with Montenegro. However regular payments to a domestic account may arouse curiosity in Montenegro.

Tip : the maximum concessional cap is not $25K.
Your condition of release assume age 60 but the preservation age and a condition of release could be lower.

You could just withdraw the whole of the super and repatriate that to another country within XX days of departing Australia (assuming a condition of release is met for cashing it all) and avoid all issues

 

Thanks so much! Everything I learnt so far indicates that the best way forward for me is to invest all surplus cash into super (instead of my portfolio outside of super). This is because I'll have to sell all my portfolio before leaving the country and pay cgt, in order to get 50% cgt discount. Is there anything obvious I'm missing?

Thanks

 

Well, how does the destination tax your super?

 

I'm trying to figure that out, but in the worst case scenario it should be 9% tax on cg and 9% tax on dividends, because that's how they tax international income from shares.

 

best to get an adviser in montenegro and determine it.

 

Fyi in case you're unaware..

Concessional caps have risen to $27,500

Key superannuation rates and thresholds

 

Could you use this strategy: when retiring and before leaving Australia, move your super to pension mode. Also have an account in accumulation mode. Each year take the minimum out of your pension account, and deposit straight to the accumulation account. As both are pension accounts, they are not reported to overseas tax authorities. You are not actually receiving the money, just transferring between accounts. This assumes that you don't need the super money while abroad, and that you will one day come back to collect it. Not sure if this is OK from an ATO & super rules point of view, any of the experts like to comment?

The other option is just to retire, take all your super in a lump sum, and then move. Then invest the money in a way that works for a Montenegrin resident.

 

Incorrect. An accumulation account is not a pension account. Pension funds wont credit a pension to an accumulation account and will require it to be credited to a domestic account in a bank held by the member. ie It must be cashed. They can't recontribute, but the member can...But why ? Moving super back and forwards isnt practical. Isnt the appropriate strategy to close the fund prior to departure and take a max pension of the full balance and just repatriate the funds to the new life. Leaving funds in super can lead to all sorts of estate issues incl lost member issues if death occurs overseas.

Nothing is ever reported to montenegro as there is no treaty. However the pension is being paid and it doesnt need to be personally received to be income. It just has to have been paid and applied. Most countries look at currency movements to detect evasion issues. If its a tax issue at all.

 

We have a clash of terminology here - an accumulation account in the eyes of CRS is a pension account that meets the definition of "Specified Excluded Accounts".

You are confusing tax treaties with the operations of CRS (Common Reporting Standard). Montenegro is joining CRS and will start next year (2023) aspart of it's move to EU membership. No tax treaty is needed for CRS to function. What happens is that Reporting Financial Institutions are obliged to gather information from their customers that have declared one or more foreign tax residencies. This information is then forwarded to the relevant authority in each country, in Australia's case the ATO. The relevant Authority then automatically passes the information to the other authorities in other countries. So the relevant authority in Montenegro will receive information from the ATO containing the details of all those who are customers of RFIs in Australia who have declared Montenegrin tax residency.

The exact xml format of the file and what is in it can be found on the OECD website, I won't repeat it here. However, what the Montenegrin authorities do with the information they receive is up to them - I do know that in practice some countries have issues parsing information from Australia due to the different tax years. With other country pairs it works really well - for example between the nordic countries bank interest and dividends earned in one country automatically appear in the tax returns of someone who is resident in the other country.

 

crs are a banking issue. Super funds are not banks and are regulated by other laws. Tax treaties are relevant for reporting . The ATO is limited in who it may report to. tax treaties are the typical basis for the oecd model tax treaty otgerwise there is no basis. Montenegro and Australia have no tax treaty. The ato cannot release taxpayer data

 

Is a simpler solution to find a 3rd country with treaties to both Oz and MTN - pay to an account in the 3rd country and transfer?


Obviously there may be residency or other matters to consider.

 

That is ineffective as a tax resident of montenegro is taxed on worldwide income. Its location isnt relevant.

 

a barrister once advised me that as Australian tax agents are not authorised to provide advice on State tax laws similarly it may be a breach to advise on international tax laws of another country. Best just call an adviser in Montenegro and work through the issues. There might not be any but who knows.