Q: We have a girl working for us who is on a UK working visa. She doesn’t have super at home in England but do we have to pay her super while she is working for us? If yes, how do we go about it? Do we put it into a special super fund that she can then transfer over to her UK one, when she gets one? I am stuck!! Please help!
You need to confirm your specific obligations with the Australian Tax Office (ATO), but generally speaking the answer is yes, an employer must pay Superannuation Guarantee (SG) for any employee who satisfies the SG conditions, even when the employee is a temporary resident.
An employer in Australia must pay Superannuation Guarantee contributions for any employee who meets the following conditions:
- She is an employee
- She is paid $450 or more for any calendar month in the relevant quarter. If the employee is employed to do work of a domestic or private nature (such as a nanny or cleaner for the family) then she must also work at least 30 hours. This 30-hour requirement also applies where the employee is under the age of 18
- She works for you in Australia.
The process involved for paying SG is the same as for other employees. If the employee doesn’t make an active fund choice (via a Standard Choice form), then the employer pays the SG contributions into the employer’s pre-selected fund. For more information on SG, see the following SuperGuide articles:
- Superannuation Guarantee: Step-by-step guide for employers
- Superannuation and employees: 10 facts about your super entitlements
- Fund choice: How do I complete a Standard Choice Form?
Can she transfer the money to a UK super fund when she leaves?
No, such an employee cannot transfer the money to a UK super fund when she leaves, but as a temporary resident, she can apply to withdraw the super benefits paid into the super fund less some tax (35%), or a lot of tax (65%, if she is considered a ‘working holiday maker’), when she leaves the country.
Note: A ‘working holiday maker’ is defined by the tax laws to be “an individual who holds Subclass 417 (Working Holiday visa), a Subclass 462 (Work and Holiday) visa, or certain related bridging visas”.
Before leaving the country, she can apply for a Departing Australia Superannuation Payment (DASP). Any person seeking information on how DASPs are taxed needs to check the ATO website for more detail, but briefly if she is a ‘working holiday maker’ then her benefit will be taxed at 65%.
If she is a temporary resident (rather than a ‘working holiday maker’), the tax treatment is as follows:
- Nil tax on tax-free component (typically, your benefit would include this component if you made a non-concessional (after-tax) contribution)
- 35% tax on taxable component (includes all employer contributions, salary sacrifice contributions and tax-deductible contributions, and also all fund earnings). If an employee works for a public sector organisation, and becomes a member of an unfunded public sector super fund, then the taxable component is taxed at 45%. Note that SG contributions are always taxed at 35% for temporary residents because they are fully funded in nearly every type of super fund.
An employee can start her DASP application while she is still in Australia, which is a good idea because if she applies more than six months after departing the country, her super fund will have already transferred her money to the ATO as unclaimed monies. She then will have to apply directly to the ATO.
For anyone to be eligible for a DASP, they must have worked in Australia on an eligible temporary resident visa, left Australia permanently, and the visa must have expired or be cancelled.
Note: Permanent Australian residents, and Australian and New Zealand citizens CANNOT apply for a DASP.
For more information on this topic see the following SuperGuide articles:
- Accessing super early: Temporary resident of Australia
- Superannuation tax: ‘Working holiday makers’ hit with 65% tax (since July 2017)
We suggest you also check out the following ATO link: Super for temporary residents departing Australia.
The Department of Immigration website also has some helpful information. Click this link for more info.