Relocating to Canada Indefinitely in July - What Are My Super/Savings Options Going Forward?

LNotScomo on 18/03/2021 - 14:12

My upcoming move to Canada with the partner has prompted me to evaluate my super/savings options into the future.

Although my savings and super aren't substantial enough to go to a fully fledged financial planner, I was hoping this community would have some sound suggestions of what to do with my Australian super and savings before moving overseas.

A couple of options off the top of my head and through brief googling:

  • Cop the tax penalty, withdraw all super and transfer to Canadian equivalent, as well as transfer all AUD to CAD

  • Keep super in AUD, transfer monthly payments from Canada to super account, as well as keep AUD savings and transfer to Canada when needed.

Any further ideas?

Cheers,

Financial

Comments

  • [Deactivated] on 18/03/2021 - 14:19
    +3

    Are you sure that cashing out your super is still an available option? So many people did it and then returned I thought they changed it so your super was held here until the original preservation age.

    • NotScomo on 18/03/2021 - 14:40
      +1

      Yeah not entirely sure if it's still an available option, but would consider it if that's the case.

      I lived overseas for two years pre-covid and saw my super dwindle down due to shitty account fees, so would definitely consider the cash out option.

      • 1ch1go on 18/03/2021 - 14:51
        +5

        If you're a permanent resident or citizen of Australia, you can't withdraw your super unless you meet a conditions of release, e.g. retirement.

        You can only withdraw your super if you worked and earned super while visiting Australia on a temporary visa.

    • deme on 18/03/2021 - 21:29
      +1

      This is stupid af.

  • avoidfullprice on 18/03/2021 - 14:40
    +3

    Review your insurance in your super, and consider switching to a low fee option within your super, such as indexed shares.

    • NotScomo on 18/03/2021 - 15:08

      Currently paying zero on super insurance and have 100% of my assets in a 'core strategy'.

      With the indexed option, the return is annually but a lower percentage and a higher risk than the core strategy…

      Having next to no knowledge in this area, the mumbo jumbo of super and investments sort of goes over my head.

      eek, help

      • avoidfullprice on 18/03/2021 - 16:02

        Depending on how long till you can access super, you would pick the investment option with a risk window to match.

        If I'm you and I'm under 35, I would pick the Balanced Indexed option with zero fee, albeit higher risk than Core. If I'm approaching 50, I'll stick with Balanced Option.

        I found the fee for each of Rest investment options here https://rest.com.au/super/understanding-fees/investment-fees…

        • NotScomo on 22/03/2021 - 20:08

          You're a legend. Thanks for the tip of the iceberg research mate. Will be digging in very soon.

  • whooah1979 on 18/03/2021 - 14:53
    +1

    Keep super in AUD, transfer monthly payments from Canada to super account, as well as keep AUD savings

    You may be better of cutting all ties with Australia and take advantage of Canada's tax structure.

    https://www.canada.ca/en/revenue-agency/services/tax/individ…

    Federal tax rates for 2021
    15% on the first $49,020 of taxable income, plus
    20.5% on the next $49,020 of taxable income (on the portion of taxable income over 49,020 up to $98,040), plus
    26% on the next $53,939 of taxable income (on the portion of taxable income over $98,040 up to $151,978), plus
    29% on the next $64,533 of taxable income (on the portion of taxable income over 151,978 up to $216,511), plus
    33% of taxable income over $216,511

    • NotScomo on 18/03/2021 - 15:02

      Yeah have seen the pros and cons of Canada's federal and provincial tax systems.

      Although according to @1ch1go, it may not be that simple to withdraw all of my funds from Australia.. I don't want to watch my super dwindle into nothing due to fees etc.

      • brendanm on 18/03/2021 - 17:17
        +1

        Why would you super dwindle to nothing exactly? You would have to have either an extremely low dollar amount, or a truly terrible fund giving near 0% returns.

    • Eeples on 18/03/2021 - 16:44
      +2

      PST+GST+HST works out at 15% in most provinces and there is tipping too.

  • JMosk on 18/03/2021 - 15:20

    First thing I would do is check if you have any insurance attached to your super and if it won't cover you in Canada then cancel.
    If you are under 40 then it might be a good idea to keep all your Super in a low cost account with a diversified moderate/high growth investment option. You will pay higher investment fees on this compared to a lower risk option but you are unable to access the money for 20+ years so this will (hopefully) be offset by the larger returns.
    If you are over 40 then a low cost account and a less risky investment option.
    If I was in your situation I would see a financial adviser so that they could give me confidence in setting my accounts up correctly and then forgetting about them.

  • down-under on 18/03/2021 - 15:33

    Not answering your questions, but just saying, you do not sound like an old person, so why are you so sure about that you don't need AUD in the future? I'm currently in the US but I kept my AUD as AUD, just buy some assets.

    By the way, Canada is cold, think again (re:indefinitely). Life is short, but not that short. :)

    • squidz on 18/03/2021 - 16:55

      he just like the snow, maple syrup n moose

  • Ocker on 18/03/2021 - 15:52

    Answer really depends on your long term plans, viz. are you leaving Australia for good, or just temporarily?

  • keo on 18/03/2021 - 16:02
    +1

    If you are under one of these few circumstances then you can try to figure out if withdrawing the money from super is a good idea.

    You can also access super in some special circumstances, including:

    COVID-19 (novel coronavirus) – early release of superannuation
    compassionate grounds
    severe financial hardships
    terminal medical condition
    temporary incapacity
    permanent incapacity
    super less than $200
    temporary resident departing Australia.

    Otherwise transfer the super to a good low fee company like australiansuper and leave it to slowly grow. Once you retire then you can revisit your circumstances. Life changes, I've lived in three countries now and still haven't decided where I will retire. I would only top up whichever super scheme in either country that would give you a better tax savings. Your super will not dwindle into nothing because of fees if you go with company with low fees and the right growth strategy depending on your age/risk appetite.

    • NotScomo on 22/03/2021 - 20:07

      Looks like some super research is due!

      My father mentioned something about Australian Super too recently. Is that the go to for a low fee, long term growth sort of situation?

  • netjock on 18/03/2021 - 16:41

    Depends on cost of transfer and whether it is worth it.

    Say if you are in the UK. Their system for super is 0% on contribution, 0% on earnings and marginal tax rate with 1/3 tax free at retirement. That is better than 15% in, 15% on earnings in Australia. Your pot will grow a lot quicker and you can figure out how much you take at retirement up to limit of 19% tax then take the Australian super to top up as it is tax free.

    To transfer a UK pension out of the UK you need to have a compliant fund (QROPS) not just any Australian fund the regulatory paperwork is enormous and do you want to bring it here to be taxed.

    Global tax rules are complex but there is anomalies that you can take advantage of.

    Check the Canadian system before transferring. Plus there might be benefits which is if you come back on annual holidays you can use the super money and not have the currency risk of converting CAD to AUD.

    • NotScomo on 22/03/2021 - 20:05

      Thanks for the insights mate, will take that into account!

  • vikvance on 18/03/2021 - 17:50

    Keep super in AUD, transfer monthly payments from Canada to super account

    Why would you want to do that ?

    The only reason to voluntarily put money in Super is for the tax advantage.

    But, if you are non-resident in Australia, then there is no Aussie taxes, and therefore no tax advantage.

    It may be better to investigate options for tax-advantaged retirement savings in Canada, and put your savings there, if you want to save extra for retirement.

  • oscargamer on 18/03/2021 - 19:27

    Not sure how it works for you, but when I moved here from the UK, I instructed my UK super fund to transfer my funds to my Australian super fund. They did this with no fees and no taxes.

    Suggest you do some research.

  • mr_asstight on 18/03/2021 - 19:56

    Move to SMSF. Buy cryptos. Cash the (profanity) out without any authorities telling you what you can and can't do with your money. You'll be fine as long as you never come back.

    • deme on 18/03/2021 - 21:31

      You will go to gaol if you do that.
      And Canada has an extradition treaty with us.

  • NotScomo on 22/03/2021 - 20:05

    Just tuned back into this thread.

    Thanks all for the amazing input! Will be digging into all options over the coming months.

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