Problems with pension transfer tax proposal

In July the Inland Revenue released a proposal that would see a percentage of each fund transferred into New Zealand treated as taxable income based on a sliding scale of how long the owner of the funds had lived in New Zealand at the time of transfer.

In their recent paper Foreign superannuation schemes - Proposed changes a step in the right direction, Ian Fay and KirstyHallett of Deloitte examined the proposal and found that while it will simplify the situation considerably, it also presents some potential problems.

Change is needed because the current rules for taxing interests in foreign superannuation schemes are "complex", they said.

"They require the consideration of the FIF (Foreign Investment Fund) regime, the trust regime and the dividend rules.