The clock starts the day you become a tax resident, not the day you transfer
When you transfer a UK pension into an Australian super fund, the growth in that pension since you became an Australian tax resident is called the "Applicable Fund Earnings" (AFE). What happens to that growth, tax-wise, depends on whether the transfer happens within 6 months of your residency start date.
Inside the 6-month window: growth isn't taxed
If the transfer completes within 6 months of becoming an Australian tax resident, the Applicable Fund Earnings are not taxed in Australia. This is the simplest, cleanest outcome, and it's the reason the date you became (or will become) a resident matters as much as the pension's value itself.
After the window closes: two options
Miss the 6-month window and you have two paths for the growth that's accrued:
- Pay tax at your marginal rate — the AFE is added to your assessable income for the year and taxed at whatever bracket that pushes you into.
- Elect a flat 15% tax under section 305-80 of the ITAA 1997 — instead of marginal rates, you can choose to have the AFE taxed at a flat 15%.
Which is better depends entirely on your income in the year the transfer happens. If your marginal rate that year is above 15%, the flat election usually wins. If it's below — for example, a year with little other Australian income — marginal rates might actually cost less. This is arithmetic worth doing with your actual numbers, not a rule of thumb applied blindly.
A practical example of the kind of question this raises
Say your pension has grown by £15,000 since you became a resident, and you're deciding between two tax years to complete the transfer — one where you have other high-income Australian earnings, and one where you don't. The 15% election could be worth thousands of dollars more in the high-income year, and worth nothing extra (or even cost you) in the low-income year. This is exactly the kind of decision your planner should be running before you transfer, not after.
Splitting the transfer to manage this
Some people split a larger pension into tranches across more than one financial year rather than transferring the whole amount at once — this can also help manage currency risk on the GBP/AUD conversion, separately from the tax question above.
Check your own dates and figures
The tool on this site calculates exactly how many days are left on your 6-month window, based on the residency date you enter — not a generic example.
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