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  • Taxation changes to departing Australia superannuation payment (DASP) for working holiday makers

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

    To be eligible to claim a DASP, the FTRs 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 recover the tax concessions provided to the temporary resident's super.

    In December 2016, as part of the working holiday maker (WHM) 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 WHMs 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 65% if the DASP includes super contributions made while the person was a WHM. Super funds will need visa information to determine the appropriate DASP tax rates to apply .

    DASP tax rates from 1 July 2017

    Super components

    DASP ordinary tax rates for non-WHM

    DASP WHM tax rate

    Tax free component

    Nil

    Nil

    Taxed element

    35%

    65%

    Untaxed element

    45%

    65%

    See also:

    What super funds need to do

    Super funds need to check for visa information in the DASP application received via DASP Online.

    Situation

    Action

    DASP application states the applicant has never held a WHM visa.

    Process the application as per usual and apply the DASP ordinary tax rates.

    DASP application states the applicant held a WHM visa and no other visa with work rights.

    As the applicant held a WHM visa you will need to determine whether the DASP includes amounts attributable to super contributions made while the applicant was a WHM.

    If it does, apply the DASP WHM tax rate as per the above table.

    If it doesn't, apply the DASP ordinary tax rates.

    DASP application states the applicant held a WHM visa along with another visa with work rights.

    As the applicant held a WHM visas you will need to determine whether the DASP includes amounts attributable to super contributions made while the applicant was a WHM.

    If it does, apply the DASP WHM tax rate as per the above table.

    If it doesn't, apply the DASP ordinary tax rates.

    Checking super contributions for WHM

    Where the DASP application has WHM visas listed, super funds will need to check whether the DASP includes amounts attributable to super contributions made while the person was a WHM.

    This means considering the dates super contributions were made and comparing them against the period for which the WHM visas, including any WHM bridging visas, were held.

    Super contributions are generally considered 'made' when they are received in the super funds bank account.

    If there were super contributions made while the applicant held a WHM visa, including any WHM bridging visa, then the DASP is taxed at the DASP WHM tax rate as per the above table. There is no apportionment of tax rates to take into account the fact that some contributions may have been made outside the WHM visa period.

    If there were no super contributions made during the period the applicant held a WHM visa, the DASP is taxed at the DASP ordinary tax rates.

    Super funds still need to check the date contributions were made even where the applicant has only ever held a WHM visa.

    Rollovers

    In some cases, the super fund may not have information regarding when super contributions were made for an applicant, for example, in the case where there is a rollover from one super fund to another (and no super contributions have been made to the super fund that receives the rollover for the applicant during the WHM visa period). As a result the super fund may not be able to determine whether the DASP includes amounts attributable to super contributions made while the person was a WHM.

    In such cases, if the applicant has held a WHM visa (including a WHM bridging visa) and no other visa with working rights, it is reasonable for the super fund to conclude that the DASP includes super contributions made while the person was a WHM, and the DASP WHM tax rate can be applied as per the above table.

    If the applicant has held both WHM and another visa with working rights, and a super fund cannot reasonably determine, based on information they hold, whether the DASP includes super contributions made while the person was a WHM, then the DASP ordinary tax rates can be applied.

    Where the super fund has made a reasonable assessment of the appropriate DASP tax rates to apply based on the information they hold at the time they process the payment, there will generally be no compliance action from the ATO should it later be determined that the information they held were not accurate or complete. However, if the ATO conducts a review and finds that the super fund held information to indicate that the DASP WHM rate should have been applied and it wasn't, the super fund will be required to adjust their withholding calculation as they currently do.

    Visa Information

    Visa information on DASP Online applications

    The DASP online application system has been updated to obtain visa information from the Department of Immigration and Border Protection (DIBP) where the applicant has held a WHM visa.

    On each DASP application, super funds will see one of the messages listed below:

    1. The DIBP records show that the applicant has never held WHM visa.
    2. The DIBP records show that the applicant held the following WHM visas and no other visas with working rights during their time in Australia.
    3. The DIBP records show that the applicant held the following WHM visas along with other visas with working rights during their time in Australia.

    Details of the WHM visas will be shown in the DASP application to help super funds determine the appropriate DASP tax rates to apply to the payment.

    Visa information on paper applications

    The Application for a Departing Australia superannuation payment (NAT 7204) has been updated to ask for visa information from WHM. Super funds with their own paper application will need to update their version of the paper form.

    A FTR who has applied for Certification of Immigration Status from the DIBP is not required to provide visa information on the paper form as visa information will be supplied by the DIBP on the certificate.

    The Certification of Immigration Status from the DIBP will only have WHM and WHM bridging visas, non-WHM visas will not be included.

    Bridging visa

    Under the law, the definition of a WHM extends to any individual who holds certain bridging visas.

    DASP applicants may not know whether the bridging visa they held is considered a WHM bridging visa.

    Therefore, if visa information comes from the applicant (by DASP online or paper applications), super funds need to look at the visa information provided and assess whether the bridging visa they held is of a kind that made them a WHM (a WHM bridging visa).

    Guidance for when a bridging visa is considered a WHM bridging visa

    Visa issued immediately before bridging visa

    Bridging visas (any bridging visa issued)

    Visa issued immediately after bridging visa

    Bridging visa type

    Subclass 417 or 462

    Bridging visa

    Subclass 417 or 462

    WHM Bridging

    Subclass 417 or 462

    Bridging visa

    None

    WHM Bridging

    Subclass 417 or 462

    Bridging visa

    Any other visa that is not 417 or 462

    Bridging

    None

    Bridging visa

    Subclass 417 or 462

    Bridging

    Any other visa that is not 417 or 462

    Bridging visa

    Any visa (including 417 or 462)

    Bridging

    There are several subclasses of bridging visa that may have been issued to a person.

    All of these subclasses are capable of being considered a WHM bridging visa when held in the sequence described in the table above.

    This means super funds will have to include the WHM Bridging visa period when checking superannuation contributions made on behalf of a DASP applicant.

    If visa information comes from the DIBP (by DASP Onlineor Certification of Immigration Status), a WHM bridging visa will be clearly listed as such, super funds will not need to carry out the above assessment.

    Administration of DASP

    Reissuing DASP

    DASP applications processed and paid by 30 June 2017 by super funds are considered complete and final. If for some reason, the payment was returned and the super fund had to issue the payment again on or after 1 July 2017, the super fund may re-issue the payment.

    Note: re-issue is not the same as paying an unprocessed DASP application. Applications that are not paid by 30 June 2017 will require visa information from 1 July 2017 to determine the appropriate tax rate to apply.

    DASP payment summaries

    DASP payment summaries issued by the ATO from 1 July 2017 include an indicator for WHM. This is to inform FTRs of the relevant DASP tax rate applied.

    The payment summary specifications for super funds have not been changed.

    Review rights

    There are no formal review rights if the applicant is dissatisfied with the DASP WHM rate when it has been applied correctly by a super fund, the super fund can refer the applicant to the DASP tax rates table for enquiries received.

    We don’t anticipate many requests for reviews of why the DASP WHM tax rates are applied. This is because super funds should be applying the DASP ordinary tax rates if the super fund cannot be satisfied, and has no reasonable basis, for concluding that the DASP includes super contributions made while the person was a WHM.

    If the super fund has made an error in withholding an amount from the DASP, the DASP recipient may request a refund from the fund 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 super fund becomes aware of the error, or the recipient of the DASP applies to the fund for a refund of the amount withheld in error, before the end of the financial year in which the amount of tax is withheld from the DASP by the super fund, then the request must be actioned by the fund. After this time, the super fund can direct the recipient to contact the ATO.

    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 confirmed that super contributions were made for Marco while he was a WHM, the fund applies the DASP WHM tax rate to Marco’s DASP.

    End of example

     

    Example 2: Camille – work and holiday visa (subclass 462) and another visa with working rights

    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 super 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 super contributions made while she was a WHM between 1 July 2014 and 30 June 2015.

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

    End of example

     

    Example 3: Jun-seo – work and holiday visa (subclass 462) and other visas with working rights

    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 super 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 super contributions made while he was a WHM between 1 July 2013 and 30 June 2014.

    As there was a super contribution made on 30 October 2013, it is reasonable to conclude the DASP did include super contributions made while Jun-seo held his subclass 462 work and holiday visa.

    The DASP WHM tax rate applies to Jun-seo’s DASP, even though the DASP is not wholly comprised of super contributions made while he held a WHM visa.

    End of example

     

    Example 4: Hanako – never held a WHM visa

    Hanako’s DASP application states she has never held a WHM visa.

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

    As Hanako never held a WHM visa, her fund can process the DASP application as per their usual process and apply the DASP ordinary tax rates.

    End of example

     

    Example 5: Priya – work and holiday visa (subclass 462) and another visa with working rights

    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 super contributions since the account was opened. It does not have dates for the super contributions made before the rollover that now form part of the account balance.

    Priya’s fund viewed her application on 7 July 2017. As Priya’s DASP application stated that she’d held both a working holiday maker (WHM) visa and other visas with working rights , her fund needs to check whether the DASP includes super contributions made while she was a WHM between 5 January 2016 and 4 January 2017.

    The balance was derived from 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 super contributions made while Priya held her working holiday visa. The fund applies the DASP ordinary tax rates to Priya’s DASP.

    End of example

     

    Example 6: Anna – working holiday visa (subclass 417) and another visa with working rights

    Anna submitted a DASP application on 20 July 2017. In her application, she stated that she held a working holiday visa (subclass 417) from 14 March 2016 to 13 March 2017 and a non-WHM visa for the period 17 February 2014 to 13 March 2016.

    Anna's super account received the following super contributions:

    • $2,300 on 28 Oct 2014
    • $900 on 28 July 2015
    • $1,800 on 28 April 2017

    Anna's fund viewed her application on 25 July 2017.

    Even though there was a super contribution made on 28 April 2017, which may relate to the January to March 2017 quarter for employer super guarantee obligations, it was made outside of the WHM visa period.

    As there were no super contributions made during the period Anna held the WHM visa, the fund applies the DASP ordinary tax rates to Anna's DASP.

    End of example
    Last modified: 08 Dec 2017QC 51936