Accessing super early: Temporary resident of Australia

Q: My husband and I are getting ready to return home (USA) after living & working in Perth for the past 2 years. We came to WA on a 457 visa. My husband has a super fund & we were wondering if we can leave the money in his super until he turns 60. My husband was born in September of 1960, which makes age 56 his preservation age, but we hope that delaying withdrawal from the super until age 60 would decrease or eliminate the 38% tax rate. If we leave the money in his super after our visa expires, then the money may be sent to the ATO. Is it safe to leave the money with the ATO for 10 years? Is there a time limit for claiming the money?

Temporary residents are treated differently under the super rules in terms of accessing super benefits early, although you need to check with the ATO how the rules specifically apply to your circumstances.

If an individual has held a temporary visa under the Migration Act 1958 (except for visas under subclasses 405 and 410), then such an individual is eligible to apply for a ‘Departing Australia Superannuation Payment’ (DASP) when leaving Australia.

In most cases, a superannuation fund must transfer the temporary resident’s super benefits to the ATO if the individual has not claimed the benefits within 6 months of departing Australia, or within 6 months of the expiry or cancellation of the visa, whichever event is later.

A temporary resident doesn’t have to claim his or her super benefits upon leaving the country or, at a later stage. It’s possible to leave the benefits in Australia until retirement, but if the super benefits are transferred to the ATO, the money is not invested on the individual’s behalf. What this means is that the super benefit does not receive investment earnings or pay insurance premiums.

Instead, since 1 July 2013, the super benefit receives a form of ‘interest’. The ‘interest’ will be paid at a rate equivalent to the rate of inflation – Consumer Price Index (CPI) on all superannuation accounts reclaimed from the ATO. I that super account had remained with the super fund, then you could have expected investment earnings (and sometimes investment losses) less fees.

Tax rate on DASPs: In relation to your comment about saving tax by leaving the super benefits in unclaimed super until the age of 60, so you don’t have to pay the 38% withholding tax, my understanding is that the 38% is still payable on the taxable component of the benefit. I believe the payment is still subject to withholding tax, even on or after the age of 60. My understanding is that former temporary residents (now non-residents) receiving money from the ATO (rather than a taxed super fund) are not eligible for tax-free payments from the age of 60, and withholding tax is payable regardless of age, or whether you have retired. In any case, you will need to confirm your individual circumstances, and the withholding tax treatment of unclaimed super benefits for non-residents, with the ATO.

Background: The withholding tax rates for DASPs 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 (certain unfunded public sector funds, although unfunded public sector super funds are not required to pay out super as a DASP).

For more information about temporary residents leaving Australia and accessing super benefits, see the special section on the ATO website titled Super information for temporary residents departing Australia.

Important: Australian citizens, Australian permanent residents, New Zealand citizens, retirement visa holders and investor retirement visa holders cannot access super benefits via a DASP. The rationale for denying these categories of fund members early access to super when they leave Australia, is that they maintain the right to retire in Australia, and can claim the Age Pension. New Zealand citizens can now transfer Australian super benefits to New Zealand retirement schemes, known as KiwiSavers. For more information on transferring retirement savings between Australia and New Zealand, see SuperGuide article KiwiSaver: Only one super fund accepts super transfers from NZ to Australia.

Note that the definition of a resident for tax purposes is different to the definition used by the Department of Immigration and Border Protection.

Comments

  1. Hi,

    I was wondering where the money is sent to once you lodge the application and the funds have been cleared for release? Can the money be wired by an bank transfer straight to an Australian (or foreign) account?

    Cheers,

    Craig

  2. Hi,
    I am on my second 457 visa and will remain in Australia for at lest two more years.
    I was wondering if I could access the part of my super that was acumilated during te time that I was on the first 457.
    Some financial difficulty has entered my life and since I can not apply for any other binifits I was hoping that this might be a way to release some of the current financial presure.

    Many regards
    Renier

  3. Hello Trish,

    I’m a recent immigrant who moved with my family here. I’m 35 years old and understanding Super and stuff. My question is since I’ve started late towards contributing to my super are there any funds that would make my returns better?? I’m not expecting any magic but what should I be looking for if I want to boost our retirement fund.

    Also I recently contributed after tax contribution of approximately $200 towards my super. My super put a personal contribution tax of $60.00. Why am I being taxed?It is right?

    Appreciate your response.

    Regards,
    Karan

  4. Hi

    I had applied for complete Super withdrawal after I left Australia.
    I got the amount but after 35% tax deduction 🙁

    I wish to know if there is a way to claim it back..may be – should I file a Tax Return for this financial year ?

    Thanks & regards,
    Viren.

  5. Hi Trish,

    I really hope you can help me out. I was working in Australia on 457 visa (2008) and during that period applied for parent visa. I am on waiting list – on bridging visa. I can remain legally in Australia till the decision is made. Once my work visa ceased (2010) I requested my super to release my funds but was told that until I leave Australia permanently or I get my PR I won’t be able to access it. I am 70 years old retiree and for the past 3 year’s I have been trying to get the funds on compassionate grounds based on special circumstances. But so far unsuccessful. Is there any way I can claim the funds?

    Would really appreciate if you could help me out.

    Regards,
    Edward

    • Hi Edward
      Thanks for your question. I have included an extract from the ATO website which answers the main part of your question.

      “Since 1 April 2009, retiring or reaching preservation age has ceased to be a condition of release of super benefits for temporary residents.

      As a result, if you have held a temporary visa under the Migration Act 1958 (except visas under subclasses 405 and 410) you must first depart Australia before you can claim your super, even if you have retired from the workforce or have reached preservation age.

      DASP withholding tax rates will apply to this payment – for more information, see Tax on your super payment.

      The link for this information is here: http://www.ato.gov.au/individuals/content.aspx?menuid=0&doc=/content/00276719.htm&page=7&H7

      In your circumstances it does seem unfair, but unfortunately this is the rule now. It may be still be possible to access your super if you satisfy other conditions of release (apart from retirement and reaching preservation age). The other possibilities can be found in the SuperGuide article: http://www.superguide.com.au/accessing-superannuation/accessing-super-early/12-legal-reasons-to-cash-your-super

      I wish you all the best
      Regards
      Trish

  6. Hi Trish
    I lived and worked in Australia for a year before moving back to NZ due to a family death at the start of 2010
    Am I able to get my Super back and how would I go about this?
    Me and my family are set to move to the UAE at the end of the year.

    Thank you

  7. Sean Webster says:

    Hi, I am in SA for almost a year on a 457 work visa. I am leaving Australia for good in the 11th month of my stay. How long after leaving can I claim my Super back and how much will be taxed?
    Do they make your super payment to a bank in Australia or can you send it to a bank outside the country?

    thanks,

    Sean

  8. paul shephard says:

    hi, I am due to leave WA permanently in august having been here for a year, am I entitled to claim the money from my super fund? what tax and penalties would I have to pay? who would I need to contact about claiming it back? thanks in advance if you can help

    paul

  9. Hi, very happy to have come across your easy to understand website.
    1. If one is still in Australia as a temporary resident at age 60, is withholding tax still deducted as it would be if one had left before then. The distinction I want to make is between temporary resident living in Australia, permanent resident living in Australia and formerly temp resident (not presently living in Australia).

    2. I presume that the concessional contribution is taxed at 15% only in the year it is made (not every successive year) ?

    3. My company makes concessional contributions for me. Although my company pays tax, it receives a deduction for this super contribution. My fund paid tax on the concessional contribution 15%, also on the investment income. Will my benefits, if received after 60 be tax-free?

    Thank you.
    Fritz

  10. des oliver says:

    Hi,
    My question is if a permanent residece visa has been cancelled are u entilted to all your super without exit fees. I aware of a person who paid a exit fee of 5500 dollar and tax 2800 dollars ,the sum he had in his super was 12,000.

    Cheers

    4

    4

  11. Hi,
    I am holding 457 work visa now. I have applied for my PR in Oct 2011. I have to go back to Nepal (home country) as I have lost my job.
    Can I get my superannuation back before I recieve my PR approval.

  12. Hello Trisha,

    I’m currently on a 457 visa which started last February 2011. My employer will be sponsoring my PR application this year. My question is, when I convert from 457 visa to PR visa, can I withdraw the super funds that I gained during my 457 visa time and start from zero super funds when I’m PR. I’m not planning to go back to my home country during the transition from 457 to PR visa.

    Thank you!

  13. Can one transfer superannuation to a similar pension fund in Canada or United Kingdom?

  14. Hi,

    Me and my husband are on a 457 VISA and this expires in Feb next year. We are looking to go back home (UK) for good in June this year, do you know if we can access our super as we are not coming back to Australia. If we can do this, how do we go about this and do you know roughly how long it takes?

    Many Thanks, Stacey 🙂

  15. hi, iam on temporaly visa here in autralia and soon moving to overseas for permanent resident and really need some money so if get a letter from immigration office to show them my departure ticket,my resident permanent visa overseas , so i would like to get super pay here before moving overseas with my familly.please heip out .need some idea. thanks.

  16. hi,
    i originally came to australia in ’03 on a temporary work visa / sponsored by my designated employer for 1 year. i continued to work in australia, i have not renewed and have been working beyond my visa requirement. in other words illegally to this day, without subsequent employers asking for details pertaining to visa requirements. i have been working full time since to this day. i am returning back to Guam permanently; question / enquiries are – am i entitled to my superfunds whilst i have been here majority of time illegally? what are the ramifications of my situation?? i have about $55,000 in current fund. how can i access or can i access these funds??? what are the tax rates??? just need clarifications / directions….

    cheers

    • Hi Esau
      Thanks for your email. I cannot comment on the treatment of illegal immigrants but if you satisfy the rules for early release of super, then you can access your super benefits.
      I’m not aware of super benefits being confiscated in these circumstances but perhaps you may wish to ask this question of the ATO, but it may be wise to ask this anonymously. Note that an individual eligible to access super benefits when departing Australian permanently can apply after leaving the country.
      Good luck
      Regards
      Trish

  17. I am thinking of returning to uk to live for a few yrs. I have Australian residency but originally came from uk.
    Can i leave my super in Australia and would it be subject to tax in uk I am 65 yrs old.

  18. Evelyn Dauth says:

    Hi,
    I am a permanent resident in Australia, born in 1960 I am in a self managed Superannuation Fund, if I return to Ireland can I access my funds? I have a cross section of funds self managed and super funds, will I be liable for taxes? can I acess 100% of my shares in the self managed fund, if my husband imigrated with me can he access his shares also?

    Thank you
    Evelyn Dauth

    • Hi Evelyn
      The general answer is no, you cannot access your super before retirement age, even when you leave the country when you’re an Australian citizen or permanent resident. If you try our in ‘accessing super early’ section, you can find several articles/ Q&As on this topic.

      Best of luck with your move.
      Regards
      Trish

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