Departing Australia Superannuation Payments

Every year, temporary residents who worked in Australia leave behind millions of dollars in superannuation.

Whether they’ve been slogging away behind a backpacker’s bar in Coogee for six months, or decided to quit their job, sell the car and move to Peru, their employer has been putting money aside for superannuation. Among sorting out all their other affairs, they’ll probably also be wondering what will happen to this super money after they leave.

Temporary residents who work in Australia, and have super contributions paid by their employer, are entitled to receive their super benefits once they leave Australia. This payment is called a departing Australia superannuation payment (DASP).

After departing Australia, a former temporary resident can claim their super at any time from either their employer (if they have not paid the Tax Office this money) or from the Tax Office (once the employer has paid).

The DASP measure applies to temporary residents who have left Australia and who will not retire here or have access to the age pension.

Temporary residents can leave their super benefits in Australia. However, if the temporary resident’s super benefit is transferred to the Tax Office as unclaimed super (which may occur six months after they depart Australia) this can be claimed from the Tax Office at any time.

Temporary residents can apply for their payment using the DASP online application system. They will need to complete a separate DASP application for each super fund or retirement savings account (RSA).

Super providers are required to make payment within 28 days of receiving complete information from an applicant. Delays may occur when a fund or RSA provider requires additional information from the applicant or additional forms are required to be completed.Temporary residents are always advised to approach their fund if they are concerned about delays.

From July I, 2014, there are new withholding tax rates for DASPs. These rates are:

  • 0% for the tax-free component
  • 38% for a taxed element of a taxable component
  • 47% for an untaxed element of a taxable component.

The tax aims to recover the concessions provided to temporary residents’ super benefits on the understanding that they were for retirement. It also replicates the tax that would have been paid if the money had been received as ordinary income and taxed at marginal tax rates.

Employers are not exempt from paying super for employees because they are temporary residents.However, Australia has entered into social security agreements with several other countries to avoid double super coverage. These bilateral agreements mean that overseas employers of employees temporarily working in Australia are exempt from this country’s superannuation guarantee because the employer is required to contribute to their home country’s super scheme.

It does not matter if the temporary resident does not supply a tax file number (TFN), as the super provider should not withhold at the top marginal tax rate unless this rate applies (for example, DASP that is a rollover super benefit). Instead, use the rates detailed in the relevant tax table.

Super providers are required to withhold tax when making the payment to former temporary residents and remit that amount to the Tax Office in accordance with their normal pay as you go (PAYG) withholding remittance cycle.

Payment summaries must be provided to temporary residents within 14 days of making the payment and must clearly state that the payment is a departing Australia superannuation payment.

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