I thought it would be useful to summarise the position in
respect of temporary entry permit holders and DASP on or after 1
Who Is Exempt From The New Rules?
These changes do not apply to:
Australian citizens or permanent residents; or
New Zealand citizens; or
A retirement visa holder (subclasses 405 and 410).
The changes will only apply to any individual who fails the
exclusion test as detailed above.
The balance of this note outlines the impact on temporary entry
New Withholding Tax Rates
The Superannuation (Departing Australia Superannuation Payments
Tax) Amendment Act 2008 has increased the rate of withholding tax
payable on a DASP.
The new withholding tax rates effective 1 April 2009 are:
Non concessional contributions 0%
Post June 1994 invalidity payments 0%
Untaxed post June 1983 component 45% (previously 40%)
The balance 35% (previously 30%)
Restriction On Accessing DASP
The Superannuation Industry (Supervision) Amendment Regulations
2008 (No. 4) has introduced restrictions on the circumstances under
which a temporary resident can access their super benefit with
effect from 1 April 2009.
From 1 April 2009, any individual who is, or has, at any stage,
been a temporary resident is only able to access their super
benefit under the following conditions of release:
Terminal medical condition;
Unclaimed money payment;
Departing Australia Superannuation Payment; and
Release authority for excess contributions
In addition, from 1 April 2009, any individual who is, or has,
at any stage, been a temporary resident is unable to commence an
Critically, as a result of these changes, with effect from 1
April 2009, an individual who is or has at any stage has been a
temporary resident will no longer be able to access their benefit
under the following conditions of release:
Permanent retirement from the workforce on or after attaining
Leaving employment at age 60
Attaining age 65
Severe financial hardship
Compassionate grounds approved by APRA
Termination of gainful employment with a standard
employer-sponsor where the individual's preserved benefit at
the time of termination are less than $200
Impact On Temporary Entry Permit Holders
The impact is severe; there can be no other description.
The temporary resident faces an effective tax rate of 44.75% on
superannuation contributions, irrespective of their actual marginal
This is not good news for temporary residents who are close to
preservation age or who have been placing large amounts of
voluntary contributions into Australian superannuation funds.
We recommend that where possible employers re-visit the
superannuation exemption conditions that may apply to
'prescribed persons' saving the company and also the
individual, large amounts of tax.
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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Long experience representing many of Australia's leading employers has taught us that in employment litigation the identity of an employee's representative is a major factor in how employee litigation runs.
Australian employees receive certain entitlements (such as annual leave and superannuation) where contractors do not.
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