What is a Departing Australia Superannuation Payment (DASP)?
Special taxation arrangements exist in Australia for superannuation benefits paid to former temporary residents after they have left the country. These benefits are referred to as “departing Australia superannuation payments”. They are basically a lump sum payment made under specific circumstances, which include:
- It is made to an individual who has already left Australia.
- It is disbursed by a superannuation entity in compliance with various regulations, including the SIS Regulations, RSA Regulations, equivalent rules of an exempt public sector scheme, or the Small Superannuation Accounts Act 1995.
Eligibility for a Departing Australia Superannuation Payment
Temporary residents who have accrued superannuation while employed in Australia on eligible temporary resident visas can access their superannuation from their fund if they fulfill the following conditions:
- The individual must have left Australia.
- They should not be Australian or New Zealand citizens or permanent residents.
- Their visa should have expired, as per the SIS regulations.
Claiming a DASP is only possible after departing Australia, but it is highly advisable to gather all necessary information and initiate the application before your departure, as starting the process after leaving may prove challenging.
In the context of Australian tax laws, a “temporary resident” is someone who holds a temporary visa granted under the Migration Act 1958 and is not considered an Australian resident (or the spouse of an Australian resident) under the Social Security Act 1991.
Compulsory and Voluntary Cashing Rules
The application of cashing rules depends on the type of superannuation fund the temporary resident was affiliated with:
- Compulsory cashing rules are applicable if the individual was a member of a regulated superannuation fund that is not categorized as an unfunded public sector superannuation scheme or if they were an Australian Defence Force (ADF) member.
- Voluntary cashing rules come into play when the superannuation fund falls under the classification of an unfunded scheme. These regulations are defined as the “conditions of release” within the SIS Regulations. They empower regulated superannuation funds or ADFs to release an individual’s benefits once the relevant conditions are met.
Retirement or Preservation Age Not a Condition for Release
An important point to note here is that temporary residents are not eligible to receive their superannuation benefits solely based on reaching retirement age or preservation age.
Even if they have retired or reached the preservation age, they must generally depart Australia before accessing their superannuation.
Conditions of Release for Temporary Residents
The only other circumstances under which temporary residents can access their superannuation benefits are as follows:
- A terminal medical condition
- Permanent or temporary incapacity
- The superannuation provider receiving a release authority from the member or the Commissioner
- The individual moving permanently to New Zealand and nominating a KiwiSaver scheme to receive their superannuation
Finding Your Superannuation
If you’ve been employed by various employers, it’s possible that you have more than one superannuation account, and these accounts might be held with different superannuation funds.
If you’re uncertain about the whereabouts of your superannuation, you can initiate a search by using the DASP online application system once you meet the eligibility criteria and provide your Tax File Number (TFN).
It’s crucial to ensure that your employer has made superannuation contributions on your behalf regularly. Employers are obligated to make these contributions quarterly.
Therefore, before submitting your application for accessing your superannuation, it’s advisable to confirm with your employer that all contributions have been made to your superannuation fund.
If you choose not to apply for your DASP, your superannuation fund will transfer your superannuation funds to the officials as unclaimed superannuation money when both of the following conditions are met:
- It has been six months or more since you left Australia.
- Your visa has expired or is no longer valid.
Application Process for DASPs
Temporary residents desiring to access their superannuation benefits after departing Australia must initiate an application with the trustee of their respective fund or ADF for the cashing of these benefits. The distinct processes for verifying the individual’s immigration status are:
- For accounts holding a balance of $5,000 or more, the trustee must ascertain, based on a written statement from the Department of Immigration and Citizenship, that the member qualifies as a temporary resident whose temporary visa is no longer valid, and that the member has departed Australia.
- For accounts with smaller balances, the trustee must receive supporting evidence indicating that the member was indeed a temporary resident whose temporary visa has ceased to be valid. Additionally, a copy of the member’s passport demonstrating their departure from Australia is required.
Handling Additional Contributions
When a former temporary resident applies for and receives their DASP, it may happen that the employer later makes additional contributions to the superannuation fund on behalf of that individual.
In such cases, the superannuation fund can disburse these additional contributions to the former temporary resident without requiring them to go through the application process again. This streamlines the handling of these extra contributions.
Communication with Employer
To efficiently manage this process and avoid any confusion or delays, the superannuation fund should proactively reach out to the employer as soon as they receive the initial DASP claim.
The purpose is to discuss and confirm whether the employer intends to settle any outstanding contributions before the upcoming quarterly Superannuation Guarantee (SG) due date.
If the employer is willing and able to make the required payments early, the superannuation fund can process these additional contributions accordingly.
Account Open Until SG Due Date
In cases where early payment by the employer is not feasible, the superannuation fund has the option to keep the former temporary resident’s account open until the next SG due date. This allows the fund to receive the employer’s final contributions as part of the regular quarterly Superannuation Guarantee process.
Specific Cases of Unclaimed Money Payments as DASPs
1. Inclusion of Certain Unclaimed Money Payments as DASPs
A superannuation lump sum can also be classified as a DASP if it is disbursed under specific sections of the Superannuation (Unclaimed Money and Lost Members) Act 1999.
2. Exceptions to DASP Classification
However, there are two circumstances in which a superannuation lump sum paid under these specific sections is not considered a DASP:
- The individual has been identified in a notice issued under another section of the Act, and certain criteria are met.
- The regulation has prescribed that the superannuation lump sum is not to be treated as a DASP.
DASP Withholding Tax
DASPs are subject to specific withholding tax rates as per the DASP Act. These rates vary depending on the components of the superannuation benefit and the individual’s visa status.
DASPs are not considered assessable income nor exempt income when received by an individual. Instead, they are subject to withholding tax, and the tax rates differ based on the components of the DASP.
- The tax-free component is taxed at a nil withholding tax rate.
- The taxed element of the taxable component is subject to a withholding rate of 35%.
- The untaxed element of the taxable component is subject to a withholding rate of 45%.
DASP Tax Rates for Working Holiday Makers (WHMs)
For DASPs attributed to superannuation contributions made while an individual held a “working holiday maker” (WHM) visa, specific withholding tax rates, referred to as DASP WHM rates, are applicable:
- Nil withholding tax rate for the tax-free component.
- A 65% withholding tax rate for the element taxed in the fund.
- A 65% withholding tax rate for the element untaxed in the fund.
- A 65% withholding tax rate for the portion that is not an excess untaxed rollover amount.
- Nil withholding tax rate for the portion that is an excess untaxed rollover amount.
Special Cases for Superannuation Funds
In situations where a superannuation fund cannot determine whether a DASP includes amounts related to contributions made during the individual’s WHM visa period (e.g., rollover amounts), the fund must apply specific rules:
- If the person holds or has held only a WHM visa with no other visas granting work rights, the DASP WHM tax rate is applied.
- If the person holds or has held both a WHM visa and other visas with work rights, the standard DASP tax rates are used.
These tax rates are designed to address the unique tax considerations associated with DASPs and WHMs.
Taxation of Payments Under $200
Under Australian tax law, some member benefits (payouts) from superannuation funds that are less than $200 are considered tax-free. This means that individuals receiving such small payouts are not required to pay taxes on those amounts.
However, the exemption for tax-free benefits under $200 does not apply to DASPs. DASPs are a specific category.
Because the tax treatment for DASPs is defined separately, regardless of the amount of the superannuation benefit, superannuation funds are required to withhold tax at the applicable rate from all DASPs.
In other words, even if a DASP is less than $200, it is not automatically tax-free, and the fund must still withhold taxes from it based on the tax rules for DASPs.
Taxation of Certain Roll-Over Superannuation Benefits
In cases where a DASP is categorized as a roll-over superannuation benefit, specific tax rates apply to the untaxed element of the taxable component. These are:
For the portion of the element that does not qualify as an excess untaxed roll-over amount, a withholding tax rate of 45% is imposed.
However, for the portion that qualifies as an excess untaxed roll-over amount, the tax rate is set at nil. This nil tax rate is implemented to prevent double taxation of this specific amount, as it is already subject to taxation under the Superannuation Act.
Returning to Australia and DASP
Returning to Australia After Claiming DASP
If you have claimed a DASP and later decide to return to Australia, it will not have any adverse effects on any future visa applications. In other words, claiming a DASP does not negatively impact your ability to apply for a new visa to return to Australia.
Applying for a New Visa
If you return to Australia at a later date and wish to stay in the country on a new visa, claiming a DASP will not hinder your ability to do so. You can still apply for a new visa and go through the standard visa application process without any penalties or restrictions related to having claimed a DASP previously.
Returning to Australia permanently
If you have come back to Australia as a permanent resident and your superannuation fund has transferred your super to Australian authorities as ‘former temporary resident – unclaimed super,’ you have two options:
- You can choose to move the transferred funds back into an Australian superannuation fund.
- Alternatively, you can apply to receive the transferred funds directly to you, provided you meet all the eligibility requirements.
In either case, it’s important to note that the payment you receive is still considered a DASP and is subject to the relevant DASP tax rate.
This article is for general information only. It does not make recommendations nor does it provide advice to address your personal circumstances. To make an informed decision, always contact a registered tax professional.