Explanatory Memorandum
(Circulated by authority of the Treasurer, the Hon Scott Morrison MP)General outline and financial impact
Working holiday makers: Departing Australia superannuation payments tax rate reduction
The Superannuation (Departing Australia Superannuation Payments Tax) Amendment Bill (No. 2) 2016 reduces the rate from 95 per cent to 65 per cent for the departing Australia superannuation payments tax that applies to amounts attributable to superannuation contributions made while a person was a working holiday maker.
Date of effect: 1 July 2017.
Proposal announced: The amendment was announced on 1 December 2016.
Financial impact: These amendments to reduce the rate of the departing Australia superannuation payments tax from 95 per cent to 65 per cent for the departing Australia superannuation payments tax that applies to amounts attributable to superannuation contributions made while a person was a working holiday maker results in a reduction in receipts of $55 million over the forward estimates period as follows:
| Underlying cash balance ($m) | 2016-17 | 2017-18 | 2018-19 | 2019-20 |
| Reduce tax rate on Departing Australia Superannuation Payment to 65 per cent | - | -15 | -20 | -20 |
Human rights implications: The amendment does not raise any human rights issues - see paragraphs 1.6 to 1.9.
Compliance cost impact: Nil.
Chapter 1 Working holiday makers: Departing Australia superannuation payments tax rate reduction
Outline of chapter
1.1 The Superannuation (Departing Australia Superannuation Payments Tax) Amendment Bill (No. 2) 2016 (the Bill) reduces the rate from 95 per cent to 65 per cent for the departing Australia superannuation payments tax that applies to amounts attributable to superannuation contributions made while a person was a working holiday maker.
Context of amendments
1.2 The rate of the departing Australia superannuation payments tax increases to 95 per cent from 1 July 2017 for working holiday makers under the Superannuation (Departing Australia Superannuation Payments Tax) Amendment Bill 2016.
Detailed explanation of new law
1.3 Temporary residents, including working holiday makers, who work in Australia, and have superannuation contributions paid by their employer, are entitled to claim their superannuation benefits once they leave Australia and their visa expires or is cancelled. This payment is called a departing Australia superannuation payment. The rates of tax applied to the departing Australia superannuation payment depend upon the make-up of the payment.
1.4 The Bill amends section 5 of the Superannuation (Departing Australia Superannuation Payments Tax) Act 2007 to reduce the rate of the departing Australia superannuation payments tax rate that applies to amounts attributable to superannuation contributions made while a person was a working holiday maker for departing Australia superannuation payments from 95 per cent to 65 per cent. [Item 1, subsection 5(3) of the Superannuation (Departing Australia Superannuation Payments Tax) Act 2007]
Commencement and application provisions
1.5 The Bill commences immediately after the Superannuation (Departing Australia Superannuation Payments Tax) Amendment Bill 2016 commences. This ensures that the rate increase in that Bill does not occur. However, the Bill will not commence at all if the Income Tax Rates Amendment (Working Holiday Maker Reform) Bill 2016 does not commence. This is because the commencement of the Superannuation (Departing Australia Superannuation Payments Tax) Amendment Bill 2016 is contingent on the commencement of the Income Tax Rates Amendment (Working Holiday Maker Reform) Bill 2016. [Clause 2]
STATEMENT OF COMPATIBILITY WITH HUMAN RIGHTS
Prepared in accordance with Part 3 of the Human Rights (Parliamentary Scrutiny) Act 2011
Superannuation (Departing Australia Superannuation Payments Tax) Amendment Bill (No. 2) 2016
1.6 This Bill is compatible with the human rights and freedoms recognised or declared in the international instruments listed in section 3 of the Human Rights (Parliamentary Scrutiny) Act 2011.
Overview
1.7 The Superannuation (Departing Australia Superannuation Payments Tax) Amendment Bill (No. 2) 2016 reduces the rate from 95 per cent to 65 per cent of the departing Australia superannuation payments tax that applies to amounts attributable to superannuation contributions made while a person was a working holiday maker for departing Australia superannuation payments.
Human rights implications
1.8 This Bill does not engage any of the applicable rights or freedoms.
Conclusion
1.9 This Bill is compatible with human rights as it does not raise any human rights issues.