• DASP and working holiday makers changes – frequently asked questions

    As part of the Working Holiday Maker Reform package there has been a change in the departing Australia superannuation payment (DASP) tax rate for working holiday makers (WHMs).

    From 1 July 2017, super funds will be required to apply a new tax rate of 65% to the taxed and untaxed elements of the taxable component of a DASP which contains amounts attributable to super contributions made while the person was a WHM (referred to as the WHM tax rate). The tax-free component continues to be taxed at 0%.

    Find out about:

    When should the new WHM tax rate of 65% be applied to a DASP?

    The new WHM tax rate is applied to the taxed and untaxed elements of the taxable component of a DASP paid to a person on or after 1 July 2017. This applies if the DASP includes amounts attributable to super contributions made while the person was a WHM.

    If a DASP does not include such amounts, the DASP ordinary tax rates apply. For payments made on or after 1 July 2017, these are 35% for the taxed element of the taxable component and 45% for the untaxed element.

    Can a former temporary resident have one member account with a fund having held a number of different visas?

    Yes, a former temporary resident (FTR) who is being paid a DASP from a fund may have one member account with a fund but have held more than one type of visa. It is therefore possible that some of the super contributions were made to that account while the person was a WHM, and some contributions were not.

    What tax rate should be applied to the DASP if the applicant has never held a WHM visa?

    If the applicant has never held a WHM visa, the tax rate to be applied from 1 July 2017 will be:

    • 35% for the taxed element,
    • 45% for the untaxed element of the taxable component of the DASP.

    What tax rate should be applied to the DASP if the applicant has only held a WHM visa?

    If the applicant has only ever held a WHM visa(s) and had super contributions made while they held that visa(s), the tax rate to be applied will be 65%. This will be for both the taxed and untaxed elements of the taxable component of the DASP.

    What tax rate should be applied to the DASP if the applicant has held both WHM and non-WHM visas?

    If a DASP paid to a person includes amounts attributable to super contributions made while the person was a WHM (that is, while they held a WHM visa) then the 65% tax rate applies to both the taxed and untaxed elements of the taxable component of the total DASP. This is the case even if the DASP is not wholly comprised of amounts attributable to contributions made while the person was a WHM. The law applies the 65% tax rate at the payment level.

    Funds will need to determine if any contributions were made to the fund while the person was a WHM. This is so they can apply the correct tax rate to the DASP. Where the fund cannot be satisfied that the DASP includes amounts attributable to super contributions made while the person was a WHM, the DASP ordinary tax rates will apply.

    What steps do super funds need to take to determine the correct tax to apply?

    A fund must be satisfied that a DASP includes amounts attributable to super contributions made while a person was a WHM to withhold tax at the WHM tax rate of 65% on the taxed and untaxed elements of the taxable component of the DASP.

    Funds will need to take steps to determine if any contributions were made to the fund while the person was a WHM. Funds will need to compare the information provided or obtained about visas held by the person to contribution details held by the fund.

    The fund will process the DASP application based on the information provided on the DASP application (which may have been entered by the applicant or the ATO) and the information they hold on the client’s account.

    What if a DASP includes, but is not wholly comprised of, amounts attributable to super contributions made while the person held a WHM visa?

    The law does not allow for apportionment. If the payment includes amounts attributable to super contributions made while the person held a WHM visa, the 65% tax rate applies to the taxed and untaxed elements of the taxable component of the DASP. This is the case if the DASP is not wholly comprised of amounts attributable to those contributions.

    If the fund has not applied the correct tax rate, and the ATO holds information to suggest this is the case, how will the ATO react?

    If the fund has made a reasonable assessment of the correct tax rate to apply, and withheld an amount from a DASP, based on information they held at the time they processed the payment, there will generally be no action from us. However, if we conduct a review of fund obligations and find information the fund holds which indicates the higher rate of 65% should have been used, the fund will be required to adjust their withholding calculation as they currently do.

    How to determine the DASP rate when it includes a rollover amount

    If an amount is rolled over into an account in a fund that is known to contain amounts attributable to super contributions made while a person held a WHM visa and a DASP is paid, the tax rate to be applied to the taxed and untaxed elements of the taxable component of the DASP will be 65%.

    However, if an amount is rolled over into an account which does not contain amounts attributable to contributions made while the person was a WHM, and details of the super contributions made to the other fund prior to the rollover can’t be determined, then the DASP ordinary tax rates may be reasonably applied.

    How will funds process DASP applications submitted before 1 July 2017, but not processed until 1 July 2017 or later and visa details have not been provided?

    The new law applies to payments made from 1 July 2017. The date of the DASP application is not relevant. The new DASP WHM tax rate of 65% can only be applied where the super fund is satisfied that the DASP includes amounts attributable to super contributions made while a person was a WHM.

    To minimise the impact on funds and individuals it is recommended that funds finalise as many DASP applications as possible before 1 July 2017.

    We have updated the DASP online application system to enable members to include visa information from Monday 26 June 2017. This will reduce the number of applications received, but not processed, before 1 July 2017 that lack visa details.

    We recognise that from 1 July 2017, funds may still hold some applications lacking visa details. We will work with the Department of Immigration and Border Protection (DIBP) to provide information to support funds processing these applications.

    What changes can funds expect to see in the DASP online application?

    The online DASP form will be updated to request additional information from a FTR:

    If a FTR has ever held either of the visas listed below, they will need to provide visa information so we can accurately assess their application:

    • Working holiday visa (subclass 417)
    • Work and holiday visa (subclass 462)
    • a bridging visa granted in relation to an application for a subclass 417 or 462 visa

    If they have never held one of these visas, they click Next on the online form.

    If they have held one of these visas, they will need to enter their visas type/s and start and end dates. This information will be passed onto funds when they download the applications from us.

    Is the paper application being updated?

    Yes. The paper application will be updated so that applicants can provide additional visa information if required. Super funds can check their contribution details against the visa details provided by the WHM.

    Will the updated paper forms be available prior to 1 July 2017?

    We are currently working towards publishing the new forms on our website as soon as possible.

    Can the DASP online form be updated and available prior to 1 July 2017 to reduce manual processing?

    We have updated DASP online application system from 26 June 2017 to enable members to enter visa information.

    Can the ATO consider turning off the DASP online system at end of June to minimise the number of forms without visa details?

    This was considered, however consensus from stakeholders determined it would be unfair to turn off the DASP online system as it would disadvantage applicants.

    Will clients using the paper application need to obtain a DIBP certificate, even if the application is for an amount of less than $5,000?

    Under the current law, only withdrawal benefits of $5,000 or more require a DIBP Certificate of Immigration Status. A law change is required to remove the option for applicants to provide visa and immigration evidence to the fund directly for benefits of less than $5,000.

    If the applicant’s withdrawal benefit is less than $5,000, they have the option to provide evidence of their visa and immigration status.

    As a result of the WHM changes, applicants will also now need to provide additional visa details, including 417, 462 and associated bridging visas on their paper application.

    Funds may have additional obligations under their trust deed.

    Is it possible to remove the paper application?

    Paper applications have always been made available as an alternative option for applicants who may not have access to online system.

    Will the ATO be providing guidance to funds to assist in implementing the new tax?

    A guidance document has been developed and published to help super funds implement the new DASP tax rate.

    If overtaxed, a client would most likely go to the fund rather than the ATO, how should funds action these requests?

    If the DASP is paid by a fund no formal ‘review rights’ exist under the income tax law if the recipient is dissatisfied with the tax rate applied to their payment and/or a decision by the fund as to how paragraph 5(3)(b) of the Superannuation (Departing Australia Superannuation Payments Tax) Act 2007 applies.

    However, if a fund has made an error with the withholding amount, the recipient may request a refund of the over withholding amount under section 18-65 of Subdivision 18 B of Schedule 1 to the TAA, or the Commissioner of Taxation under section 18-70 (depending on the timing of the request).

    If the fund becomes aware of the error or the recipient of the DASP applies to the fund for a refund before the end of the financial year in which the amount of tax is withheld from the DASP by the fund, the request must be actioned by the fund. After this time, the recipient can apply to the ATO for a refund.

    Can the ATO speed up the process by obtaining the data from DIBP and utilising the bulk data exchange?

    We are working with DIBP to provide real time validations and providing WHM visa details. The solution for the 1 July implementation will be a self-assessed approach asking applicants to provide their visa details and start/end dates if they have held a 417 or 462 visa.

    As clients may have difficulty accurately remembering dates/visa types, could the ATO provide information – for example, PAYG information?

    No, PAYG is only reported annually.

    What visa information will the DASP online application require?

    The DASP online application system will ask for the visa type, start date and end date. The visa type options will be:

    • working holiday visa (subclass 417)
    • work and holiday visa (subclass 462)
    • bridging visa
    • other visa type (not 417 or 462).

    Is providing the additional visa information compulsory?

    For processing WHM applications the additional visa information is required.

    What information will funds require to process DASP applications from 1 July 2017, will it be based on the visa effective date or the contribution date?

    Funds will need to use information provided and made available to them in relation to visas held by the applicant. They need to compare it to contribution details held by the fund to determine whether any super contributions were made during the period the applicant held a WHM visa.

    If an applicant has three accounts in a fund, will the fund pay one DASP to the applicant or one from each account, and how will the payments be taxed?

    If there are three different accounts and only one contains amounts attributable to contributions made while the applicant held a WHM visa, the 65% tax rate only applies to a DASP payment made from that account.

    If your fund normally makes one payment then the taxed and untaxed elements of that payment will be taxed at 65%. If your fund pays a DASP from each account then only the payment from the account containing amounts attributable to super contributions made while the applicant was a WHM will be taxed at 65%.

    As ATO shares information from DIBP, can there be some built-in portal for the funds to do the same with DIBP

    ATO confirmed that due to privacy policy principles, funds cannot access information from DIBP.

      Last modified: 03 Jul 2017QC 51935