Our July 2008 Newsletter (see HERE) reported the government’s proposal to impose a requirement that superannuation accumulated by temporary residents while working in Australia is transferred to the Australian Taxation Office annually.
Concerns were compounded by the government’s intention to pay no interest on the funds held by the ATO. We expressed our displeasure at the time, noting that such measures would make Australia a less desirable (if only temporary) destination for foreign executives and skilled workers.
Apparently, we were not the only ones.
Following the receipt of almost fifty submissions from industry bodies and lobby groups during the consultation period, the government has decided not to proceed with the initiative in its original form. The revision means that the superannuation of temporary residents will remain in their fund while they are in Australia and they will continue to be able to take their superannuation with them when they depart.
Once a temporary resident has departed Australia, been gone in excess of six months and no longer holds a visa, the government will transfer the superannuation account balance to the ATO under existing unclaimed money provisions if the person has not claimed the funds on departure.
A former temporary resident will be able to claim back any superannuation that has been paid to the government, at any time. This is a major departure from the initial plan to allow former temporary residents only five years to claim the superannuation from the Tax Office, and to impose withholding tax on the payments. Funds not claimed within five years were to be forfeited.
This outcome reduces red tape for businesses and provides fairer treatment for temporary residents by allowing them to access the same superannuation arrangements as other employees and to receive insurance cover through continuing membership of superannuation funds while resident in Australia. It also removes what would have been a disincentive for foreign executives and other skilled workers to respond to work opportunities in Australia.
The changes will take effect from the date of Royal Assent, which is expected by the end of 2008.© Guerdon Associates 2021 Back to all articles