Australia Addresses Unclaimed Social Security By Non-Residents

by Mary Swire, Tax-News.com, Hong Kong

30 September 2008

Nick Sherry, Australian Minister for Superannuation and Corporate Law, has announced the introduction into parliament of legislation which will help address the government’s concerns over the growing amount of lost or unclaimed superannuation (social security) contributions, by temporary residents in Australia.

The Temporary Residents’ Superannuation Legislation Amendment Bill 2008 and the Superannuation (Departing Australia Superannuation Payments Tax) Amendment Bill 2008 were both introduced in the House of Representatives on Monday.

“While temporary residents who depart Australia are able to take their superannuation with them as a departing Australia superannuation payment (or DASP), many do not do so. This contributes to the total amount of lost monies in the system,” said Sherry.

Under the superannuation system, employers are required to pay a percentage of an employee's income, currently a minimum of 9%, into a super fund which is then claimed by the individual at the time of retirement, invalidity or death.

The new legislation provides that the superannuation of a temporary resident will become unclaimed and payable to Australia after the individual ceases to hold a temporary visa, has departed Australia and at least six months have passed and they have not claimed their superannuation.

The superannuation of Australian citizens, New Zealand citizens, current holders of a permanent or temporary visa, those applying for permanent residency and those holding retirement visas will remain in their superannuation fund and will not be required to be paid to the state.

“It is important to note that temporary residents who fail to claim their superannuation when they depart and consequently have unclaimed superannuation paid to the Commonwealth, can later claim back their money at any time,” Sherry continued.

“This outcome provides a consistent or better treatment to temporary residents compared to that in many other countries where temporary residents may be unable or limited in accessing their compulsory social security contributions,” he added.

The proposed changes will apply from the date of proclamation, with the first payments from superannuation funds to the Australian Taxation Office in respect of departed temporary residents expected to occur in April 2009.

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