Pam Roberts
News

Adviser Update: Temporary Resident Superannuation

By Pam Roberts

IOOF has received a list from the ATO of super accounts where the member is a former temporary resident who departed Australia more than 6 months ago. Under changes to tax and super law these benefits must be paid to the ATO in full by 15 June 2009.

This first notice relates to those who departed before 1 July 2008. Following this, notices from the ATO will be provided every six months, with payment due by 31 October and 30 April each year.

There were only a limited number of advised super clients in the ATO list just received. If you wish to check whether any of your clients have been included on the notice from the ATO, please contact your IOOF BDM for assistance.

As a courtesy, affected clients with significant balances will be contacted directly (if we hold their new overseas address).

Where an account is invested in illiquid/frozen assets, the ATO has approved an extension and the account need not be paid to the ATO until the redemption restrictions have been lifted from the underlying investment.

Please note:

  • Once the ATO has notified us that an account is a departed temporary resident’s super account, no further withdrawals can be made from the account until it has been paid to the ATO. The client can then claim the benefit from the ATO directly as a Departing Australia Superannuation Payment (DASP). The ATO will pay the DASP net of withholding tax on the taxable component at the rate of 35 per cent.
  • Only departed temporary residents’ accounts are impacted. The Australian super of permanent residents and citizens of New Zealand is not affected. Permanent resident and New Zealanders can leave Australia and have a right to return and retire here. Therefore super benefits must remain in Australia and cannot be paid early as DASPs. On retirement, these benefits are not DASPs and are tax free after turning age 60. The exemption also includes holders of retirement visas (subclass 405 and 410) and departed temporary residents currently receiving income streams.
  • Under new super preservation rules, unless a temporary resident met a condition of release such as retirement after turning age 55 or reaching age 65 BEFORE 1 April 2009, they will be unable to access their super except as a DASP or under the permanent incapacity condition of release.

Insurance cover obtained via the Insurance Online / UWPlus systems is provided by TOWER Australia Limited (TOWER) ABN 70 050 109 450, AFS Licence No 237848. TOWER is a member of TOWER Australia Group Limited, a publicly listed specialist Australian life insurance company.