• Changes to the taxation of the departing Australia superannuation payment (DASP) for working holiday makers

    Eligible former temporary residents who have worked in Australia and accumulated superannuation can currently access their super benefits early (prior to reaching preservation age) by applying for a departing Australia superannuation payment (DASP).

    To be eligible to claim a DASP, the former temporary resident’s visa must have ceased to be in effect (for example, it has expired or been cancelled), they must have departed Australia and they cannot be an Australian or New Zealand citizen or permanent resident. A DASP is subject to a final withholding tax to recoup the tax concessions provided to the temporary resident's super.

    In December 2016, as part of the working holiday maker reform package, legislation was passed to increase the tax rate applied to the taxed and untaxed elements of the taxable component of a DASP for working holiday makers (WHM) to 65% from 1 July 2017.

    This information is to help super funds apply the correct withholding tax to a DASP made on and after 1 July 2017.

    On this page:

    New tax rate for working holiday makers

    A working holiday maker (WHM) is an individual who holds a working holiday visa (subclass 417) or a work and holiday visa (subclass 462). A WHM may also be an individual who holds a bridging visa granted in relation to an application for a subclass 417 or 462 visa.

    From 1 July 2017, super funds will need to withhold tax from a DASP paid to a former WHM at a higher rate. If a DASP includes amounts that are attributed to super contributions that were made while the person was a WHM, the rate of withholding tax on that DASP rises to 65% if the DASP is paid on or after 1 July 2017.

    Super funds will need additional details from DASP applicants (that is, visa information) to determine whether to apply the higher tax rate to any DASP applications received.

    DASP tax rates that apply from 1 July 2017

    Super components

    Ordinary DASP rate for non-WHM

    DASP rate for WHM with super contributions attributable while on a WHM visa

    Tax free component

    0%

    0%

    Taxed element

    35%

    65%

    Untaxed element

    45%

    65%

    See also:

    What super funds need to do

    To minimise the impact on funds and individuals, it is recommended that super funds finalise as many DASP applications as possible before 1 July 2017. Funds need to process DASP applications as follows.

    Before 1 July 2017

    Situation

    Action

    If you receive and process a DASP application from a former WHM and make a payment before 1 July 2017

    DASP applications from a former WHM received and processed before 1 July 2017 where the payment is made before that date will be subject to the existing withholding tax rates applying to all DASPs before 1 July 2017.

    If you receive a DASP application from a former WHM, but do not process it in time to make a payment before 1 July 2017

    The new withholding tax rate applies for DASPs paid on or after 1 July 2017. Applications received before 1 July 2017, but not processed by then, will be subject to the new law.

    From 1 July 2017

    Situation

    Action

    If you receive a DASP application from a former WHM on or after 1 July 2017

    The new withholding tax rate applies for DASPs paid on or after 1 July 2017.

    From 1 July 2017, DASP applications (via both the DASP online system and paper forms) will include the applicant’s visa information. This will enable you to determine which applicants held a WHM visa and which applicants did not, so you can process applications and withhold tax from the DASP at the appropriate tax rate.

    You will need to use the visa information provided in the application and match super contributions against the WHM visa periods to determine whether the DASP includes amounts attributable to super contributions made while the person was a WHM.

    If there were such attributable amounts, apply the WHM DASP tax rates referred to in the above table. If there were not, apply the ordinary DASP tax rates.

    Where the applicant has only ever held a WHM visa and no other visas, the WHM DASP tax rate can be applied as the entire amount is attributable to super earned while the person was a WHM.

    If you receive a DASP application from a non-WHM on or after 1 July 2017

    The ordinary DASP tax rates will apply to a DASP for a non-WHM. You can continue to apply your current processes to these DASP applications.

    If you process a DASP application on or after 1 July 2017 that was submitted before 1 July 2017

    The new withholding tax rate applies for DASPs paid on or after 1 July 2017.

    DASP applications submitted before 1 July 2017 will not include visa information that will enable you to determine applicants who are a WHM and applicants who are not a WHM. Funds will need visa information for these applications to determine the appropriate DASP tax rate to withhold.

    To minimise the impact for funds, we are aiming to have the DASP online system updated from 26 June 2017. This update will enable applicants to enter visa information so funds will have the required details in the DASP applications received.

    We will also support funds by working with the Department of Immigration and Border Protection (DIBP) to provide visa information for outstanding DASP applications. Funds will get the information they need to process DASP applications and apply the appropriate tax rate.

    Examples of applying the correct tax rate

    Example 1: Marco – working holiday visa (subclass 417)

    Marco’s DASP application states that he held a working holiday visa (subclass 417). Marco submitted his DASP application on 1 July 2017, and his fund viewed his application on the same day.

    As only a WHM visa was listed in Marco’s application, and information held by the fund showed that super contributions were made for Marco while he was a WHM, the fund applies the DASP tax rate for WHM to Marco’s DASP.

    End of example

     

    Example 2: Camille – work and holiday visa (subclass 462) and another visa type

    Camille’s DASP application states that she held a work and holiday visa (subclass 462) from 1 July 2014 to 30 June 2015, and another visa type from 1 July 1998 to 30 June 2012.

    Camille's super account was opened on 1 July 1998. A contribution of $1,500 was paid to the fund on 1 May 2012.

    Camille submitted her DASP application on 2 July 2017, and her fund viewed her application on 3 July 2017.

    As Camille’s DASP application stated that she’d held both a WHM visa and another visa type, her fund needs to check whether the DASP includes amounts attributable to super contributions made while she was a WHM between 1 July 2014 and 30 June 2015.

    As the last contribution was made on 1 May 2012, it is reasonable to conclude that the DASP did not include contributions made while Camille held the 462 work and holiday visa. The fund applies the ordinary tax rates to Camille’s DASP.

    End of example

     

    Example 3: Jun-seo – work and holiday visa (subclass 462) and two other visa types

    Jun-seo’s DASP application states that he held a work and holiday visa (subclass 462) from 1 July 2013 to 30 June 2014.

    Jun-seo also held a different visa type from 1 July 1998 to 30 June 2001, and another visa type from 1 July 2004 to 30 June 2010.

    Jun-seo’s super account was opened on 1 July 1998: The following contributions were paid to the fund:

    • $1,500 on 10 April 2000
    • $1,000 on 28 April 2010
    • $800 on 30 October 2013.

    Jun-seo submitted his DASP application on 1 July 2017, and his fund viewed his application on 10 July 2017.

    As Jun-seo’s DASP application stated that he’d held a WHM visa and two other visa types, his fund needs to check whether the DASP includes amounts attributable to super contributions made while he was a WHM between 1 July 2013 and 30 June 2014.

    As there was a contribution made on 30 October 2013, it is reasonable to conclude the DASP did include contributions made while Jun-seo held his work and holiday visa.

    The DASP tax rate for WHM applies to Jun-seo’s DASP, even though the DASP is not wholly comprised of amounts attributable to those contributions.

    End of example

     

    Example 4: Hanako – no visa information

    Hanako’s DASP application does not include any visa information.

    Hanako’s super account was opened on 1 July 2011. A contribution of $1,500 was paid to Hanako’s account on 28 January 2013, and a contribution of $1,000 was paid on 15 December 2015.

    Hanako submitted her DASP application on 24 June 2017, and her fund viewed her application on 7 July 2017. Hanako’s application does not include any visa information, as it was submitted before the DASP online system was updated. This means that her fund will now need visa information to process her application.

    The fund found out from the ATO that Hanako held a:

    • working holiday visa (subclass 417) from 1 October 2015 to 30 October 2016
    • other visa type from 1 July 2011 to 30 June 2014.

    As Hanako held a WHM visa and another visa type, her fund needs to check whether the DASP includes amounts attributable to super contributions made while she was a WHM between 1 October 2015 to 30 October 2016.

    As there was a contribution made on 15 December 2015, it is reasonable to conclude the DASP did include contributions made while Hanako held her working holiday visa.

    The DASP tax rate for WHM applies to Hanako’s DASP, even though the DASP is not wholly comprised of amounts attributable to these contributions.

    End of example

     

    Example 5: Priya – work and holiday visa (subclass 462) and another visa type

    Priya’s DASP application states that she held a working holiday visa (subclass 417) from 5 January 2016 to 4 January 2017, and another visa type from 17 March 2013 to 20 May 2015.

    Priya’s super account was opened on 12 October 2016 with a balance of $9,000 from a rollover. The fund has not received any contributions since the account was opened. It does not have dates for the contribution of the rollover balance.

    Priya’s fund viewed her application on 7 July 2017. As Priya’s DASP application stated that she’d held both a WHM visa and another visa type, her fund needs to check whether the DASP includes amounts attributable to super contributions made while she was a WHM between 5 January 2016 and 4 January 2017.

    The balance was a rollover and Priya’s fund does not have the dates of when the original contributions were made, so it is unclear to the fund whether the rollover includes contributions made while Priya held her working holiday visa.

    In this case, Priya’s fund cannot reasonably conclude that the DASP includes amounts attributable to contributions made while Priya held her working holiday visa. The fund applies the ordinary DASP tax rate to Priya’s DASP.

    End of example
    Last modified: 05 May 2017QC 51936