What is The QROPS system?

Qualifying Recognised Overseas Pension Scheme (QROPS), is a certification given by Her Majesty's Revenue & Customs (HMRC). When an Australian superannuation fund is classified as a QROPS it means that it can accept UK pension funds without the fund member having to pay any tax (certain exceptions apply). In turn, the QROPS agrees to certain reporting requirements as set out by HMRC.

If a transfer is made to an Australian superannuation fund that is not classified as a QROPS, such a transfer is deemed an ?unauthorised transfer payment?. Up to 55% in tax charges may apply as follows:

• 40% UK tax charge, plus
• 15% unauthorised payments surcharge if the transfer (in a 12-month period) exceeds 25% of the member's fund.

Member payment charges are avoided after funds have been in Australia for five entire UK tax years.

Please note that UK tax year runs from 6 April to 5 April the following year, whereas the Australian tax year runs from 1 July to 30 June.

A list of QROPS can be found on the HMRC website http://www.hmrc.gov.uk/PENSIONSCHEMES/qrops-list.htm