Superannuation (Departing Australia Superannuation Payments Tax) Amendment Act 2016

Overview

The Superannuation (Departing Australia Superannuation Payments Tax) Amendment Act 2016 was enacted by the Parliament of Australia to amend the existing Superannuation (Departing Australia Superannuation Payments Tax) Act 2007. The primary purpose of this legislation is to address the taxation of superannuation payments made to individuals leaving Australia, particularly those who were working holiday makers. By amending the original Act, this legislation ensures that the tax rates on departing Australia superannuation payments are appropriately adjusted for those who made contributions while working under a working holiday visa. The Act commenced on 2 December 2016, the same date as Part 1 of Schedule 1 to the Income Tax Rates Amendment (Working Holiday Maker Reform) Act 2016. The policy objective is to align the tax treatment of superannuation contributions made by working holiday makers with those made by other Australian residents, thereby ensuring a fair and consistent application of superannuation tax laws.

Scope and Application

The Superannuation (Departing Australia Superannuation Payments Tax) Amendment Act 2016 applies to individuals who are departing Australia and making superannuation payments from their superannuation accounts. Specifically, it targets those who receive a superannuation payment on or after 1 July 2017, and includes amounts attributable to superannuation contributions made while the individual was a working holiday maker. The Act amends the Superannuation (Departing Australia Superannuation Payments Tax) Act 2007, altering the tax rates for certain superannuation payments made to departing Australians. The amendment affects the tax percentages for these payments, setting them at 95% for those payments that include contributions made by working holiday makers. The Act applies across the Commonwealth of Australia and is not limited to specific states or territories. There are no stated exclusions or exemptions in the Act itself, although it does provide for adjustments to be made via subordinate instruments if necessary.

Key Provisions

The Superannuation (Departing Australia Superannuation Payments Tax) Amendment Act 2016 (Act) amends the Superannuation (Departing Australia Superannuation Payments Tax) Act 2007. It introduces changes specifically related to superannuation payments made to individuals who leave Australia, particularly those who were working holiday makers. The key amendment is found in section 5 of the 2007 Act, where a new subsection (3) is added. This new subsection specifies that if a superannuation payment is made to a person on or after 1 July 2017, and includes amounts attributable to superannuation contributions made while the person was a working holiday maker, the tax percentages applicable to those payments will be 95%. The Act imposes specific obligations on superannuation funds to ensure that departing Australia superannuation payments made to former working holiday makers are correctly taxed. These funds must apply the 95% tax rate to the relevant superannuation payments, as outlined in the new subsection (3) of section 5 of the 2007 Act. This change ensures that superannuation contributions made during a person's time as a working holiday maker are subject to higher taxation upon departure from Australia, aligning with broader tax policy objectives. Breaching the provisions of this Act could lead to civil or criminal consequences, depending on the nature and intent of the breach. While the Act itself does not detail specific penalties, breaches of superannuation laws generally can result in substantial fines and other civil penalties under the Superannuation Industry (Supervision) Act 1993. In cases where the breach is deemed to be willful or involves significant amounts, criminal charges could be pursued under the Criminal Code Act 1995, potentially leading to imprisonment. Therefore, compliance with the new tax rates and reporting requirements is crucial for superannuation funds and individuals alike.