qrops tax implications

[Pete & Sheila]

Does any one know what the tax implications are when you draw down money from a qrops scheme.
I am at a point when i am aloud to draw down 49% of my funds.
As i am still in full time employment will this mean i have to pay tax on it.

[chrisl34]

Does any one know what the tax implications are when you draw down money from a qrops scheme.
I am at a point when i am aloud to draw down 49% of my funds.
As i am still in full time employment will this mean i have to pay tax on it.

This is a complicated area. In very basic terms, if you drawdown before 31 March 2014 some or all of the drawdown can be taxed (unless you arrived in NZ in the last 48 months and have not claimed Working for Families). If you drawdown from 1 April 2014, some or all of the drawdown can be taxable in NZ (depending on how long you have been in NZ, but not taxed if you drawdown within 48 months of first arriving here). If you drawdown (or apply to) there is a concession to have 15% of the drawdown treated as income (which can be favourable if you would otherwise have more income).

There are other variables that you would have to work through. Depending on the amount being drawdown, you should take professional advice from a tax advisor

[Pete & Sheila]

This is a complicated area. In very basic terms, if you drawdown before 31 March 2014 some or all of the drawdown can be taxed (unless you arrived in NZ in the last 48 months and have not claimed Working for Families). If you drawdown from 1 April 2014, some or all of the drawdown can be taxable in NZ (depending on how long you have been in NZ, but not taxed if you drawdown within 48 months of first arriving here). If you drawdown (or apply to) there is a concession to have 15% of the drawdown treated as income (which can be favourable if you would otherwise have more income).

There are other variables that you would have to work through. Depending on the amount being drawdown, you should take professional advice from a tax advisor

We arrived in June 2008 and the draw down from the fund will be after April 6th 2014. So shouldn't fall foul of the tax man in the UK. not sure what to expect here in NZ though i have spoken to a tax adviser who doesn't seem to knowledgeable but is looking into it for me. my other option was to go straight to a chartered accountant which could be quite expensive. so will hold on for a bit before i go down that route. The only problem is we have claimed the working for families tax credit since being here . We transfered the fund in October 2009.

[chrisl34]

We arrived in June 2008 and the draw down from the fund will be after April 6th 2014. So shouldn't fall foul of the tax man in the UK. not sure what to expect here in NZ though i have spoken to a tax adviser who doesn't seem to knowledgeable but is looking into it for me. my other option was to go straight to a chartered accountant which could be quite expensive. so will hold on for a bit before i go down that route. The only problem is we have claimed the working for families tax credit since being here . We transfered the fund in October 2009.

Sorry, I thought your Scheme was overseas. I take if from your comments that 100% of your UK scheme was transferred to a NZ QROPs scheme in October 2009. If you hadn't claimed WFF, then that transfer of funds into NZ would have been tax-free under the 48 month tax exemption for new migrants. If you had a NZ accountant advising you back then, the impact of claiming WFF should have been explained to you.

However, as you claimed WFF then there is no 48 month tax exemption and the transfer of funds from the UK scheme is considered a distribution from a foreign trust or a dividend from a foreign company (depending on the legal status of the UK fund). Both scenarios can result in some or all of the 2009 transfer amount being taxable in NZ. Worst case, 100% of it was taxable.

Again, you need to weigh up the cost of potential tax on 100% of the 2009 transfer amount (plus penalties and interest since then) vs the concessionary option mentioned previously (which has no interest and penalties) vs the cost of getting professional advice.

On the assumption the 49% transfer you referred to is a transfer from the NZ scheme to you, this will not be taxable to you under NZ tax law.

[PS I am a Chartered Accountant specialising in tax, so have given advice in this area before]