By: Steve Burnham
Whether you’ve been on a working visa and have been slogging away bagging bananas in Tully for six months, or decided to quit your city job and move to Peru, your employer has been putting money aside for your superannuation. Among sorting out all your affairs, you’re probably also wondering what will happen to your super money when you leave.
The adage of “you can’t take it with you when you go” is only half true in this case. It all depends on if you were a permanent, or temporary resident.
If you were a permanent resident
Say you have been a permanent resident of Australia who has moved to another country and wish to take your super with you – sorry, but you’ll have to wait. You aren’t able to access your Australian superannuation savings until you pass preservation age or retire, no matter where you may be living. There are some exceptions regarding this relating to health and hardship – but it’s best to contact your fund to discuss your specific concerns.
If you were a temporary resident
Each year in Australia, millions of dollars in unclaimed super is left behind by temporary residents who don’t realise they are able to claim their contributions when they leave. Temporary residents who permanently leave Australia are entitled to receive the super money that has been put aside by their employer. This is known as a Departing Australia Superannuation Payment – or DASP.
If you leave the country and haven’t claimed your superannuation at least six months before you leave, it goes to the ATO. After that, you’ll need to approach the ATO, which will repay it after taxes are taken out.
DASP payments are not considered part of an individual’s assessable income; however, the DASP payment will be subject to the normal rates of DASP withholding tax. The tax-free component of super payments lives up to it’s name — that is, zero tax.
The taxed element is the amount of the taxable component of the super lump sum that represents the return of amounts that have been subject to tax in the fund, for example, taxable contributions and fund earnings. The tax rate for the taxed element is currently 38%.
The untaxed element is the amount of the taxable component of the super lump sum that represents amounts, other than the tax-free component, that have not been subject to tax in a fund. This usually occurs because the super lump sum is sourced at least in part from a scheme that is not subject to tax. The tax rate for the untaxed element is currently 47%.
You can apply for your DASP online here.
The backpacker fly in the DASP ointment
The announcement of the “backpacker tax” before the last federal election caused quite a stir, as the proposal would have hit working holidaymakers with a 32.5% tax on earnings (from the first dollar of income) plus a 35% tax on employer super contributions when they left the country.
But the government has now decided (pending a Senate committee review) that the proposed 32.5% tax rate will revert to 19% from January 1, 2017. This will still be applied from the first dollar.
Also in the revised backpacker package however is an increase in the tax rate applied to super payments when they leave Australia. This is proposed to apply at 95%. To rub salt into this wound, the departure tax (passenger movement charge) is also going to be up by five bucks.
Member, Lindisfarne, Tasmania, writes:
Backpacker tax: What an administrative disaster, changing the rate of tax during a tax year.
Farmers will have to issue a Payment Summary for work done up to 31 December 2016, taxed at one rate and a separate one taxed at a higher rate. The ATO will have to write hundreds of lines of code to handle that subtle difference. The Personal tax return will have to be redesigned to capture the dates.
All tax return software writers will have to write hundreds of lines of code… All payroll bureaux ditto.
Tax agents will have longer interview times.
Source: Tax & Super Australia
