Deloitte Dunedin associate tax director Phil Stevenson said the extensions were a big win for many taxpayers who were unsure if they could receive their pension transfers before the April 1 cut-off date.
Revenue Minister Todd McClay announced key changes to the Taxation (Annual Rates, Foreign Superannuation and Remedial Matters) Bill which sets out simplified new tax rules on overseas superannuation schemes.
Much of the Bill dealt with the estimated 70% of New Zealand residents with overseas superannuation schemes who had not been paying the right amount of tax, or indeed any tax, when they transferred that cash to a New Zealand scheme or withdrew a lump sum.
Under the new legislation, from April 1 this year, lump sums from foreign superannuation schemes would be taxed only when they are withdrawn or transferred to a New Zealand or Australian scheme.
The tax would depend on the investment returns made while the person was a New Zealand resident.
Mr Stevenson said the change allowed people to have certainty about the tax treatment of the transfer or withdrawal. That was a major simplification over the existing regime which saw investment gains taxed under foreign investment fund rules.
''We have seen examples where the difference between the amount to return under the concession and the new rules can be large.''
The concession would benefit people who had been New Zealand tax residents for more than seven years because they would return lower taxable income if they applied the concession compared with applying the new rules, he said.
People who had complied with those rules would still have the option of paying tax under them when the new regime comes into effect in April next year.
The concession was a pragmatic approach to deal with historic non-compliance due to a lack of awareness of the rules, particularly on UK-based pensions which had been subject to the foreign investment fund rules since 2006, Mr Stevenson said.
Applying the concession would result in significant penalty and interest savings for people who did not comply with their obligations in prior years.
''The flip side is there is an increased risk of IRD activity for those taxpayers who made withdrawals previously and do not apply the concession,'' he said.
Forsyth Barr investment adviser Gordon Tucker said the time frame to complete a UK pension transfer into a KiwiSaver scheme could vary widely from one months to seven months.
''This is due to a number of factors but normally include the time the KiwiSaver member takes to provide key pieces of documentation to their KiwiSaver provider.''
Time zones varied, so contact between KiwiSaver and UK administrators was limited to email and mail and any problems took longer to resolve, he said.
The processing speed of the UK providers could vary between very fast and extremely slow and if the UK provided the transfer payment by cheque, that could take three to four weeks to clear.
''Given the deadline to start a UK pension transfer under the new regulatory framework is March 31, 2014, it is important for those considering making a transfer to take action soon,'' Mr Tucker said.
