Irish Echo News

by Aaron Dunne

Savings accrued in the superannuation funds of temporary residents here may be forfeited to the Australian Tax Office (ATO) if not claimed within five years of leaving the country.

A new consultation paper from the Minister for Corporate Law and Superannuation Nick Sherry, has proposed the scheme along with a range of other innovations.

The move would see an estimated $1bn raised for the Treasury over three years, and would impact on backpackers and other temporary residents of Australia.

Employers in Australia are compelled to pay nine per cent of a worker’s gross wage into a superannuation fund. Usually, these funds cannot be accessed until the worker turns 55. However, temporary residents or those leaving the country permanently can ‘cash in’ their super, less tax.

Now, under the new proposals, anyone who spent time in Australia on a temporary basis and have since left for good, and who decided not to ‘cash in’ their super, may forfeit those savings to the ATO.

Minster Sherry said the Government was not was not prepared to subsidise the tax-preferred savings of people from overseas, but the superannuation industry has been highly critical of the plans.

“We’re really not happy about this at all from an ASFA point of view,” Pauline Vamos, Chief Executive Officer of the Association of Superannuation Funds of Australia told the Irish Echo last week.

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“The industry doesn’t like this at all, but it’s public policy. We have a lot of concerns, and there are some aspects we want to see changed.

 “There are a lot of administrative issues here that need to be straightened out, the last thing we want is for the extra costs of this policy to be put on the funds themselves. Of course we don’t like it, but it’s a public policy issue and if it does go through we just want to be sure that it has a minimal impact.”

As it stands, temporary residents of Australia must pay 9% of their income to a superannuation fund of their choosing – just like any other Australian – but they are entitled to claim this money back when they leave the country for good – unlike Australians.

 Many backpackers and other temporary residents have accrued money in their superannuation accounts and have left the money in Australia, either by design to make interest, or by neglect or not knowing that they were entitled to claim it back. The main aim of this new policy is to gather all that ‘lost’ or unclaimed money together.

 “It’s intended to bring together all the bits of money that temporary residents have left behind and just not bothered with. It’s really only going to affect those bits of ‘lost’ money,” Vamos explained.

The government has argued that the proposals will help clean up problems with ‘lost’ or unclaimed superannuation, which sat at a staggering $5.6bn at the end of June last year. An estimated 20 per cent of this figure involves money held in the accounts of temporary residents.