What is an Australian Superannuation?

by | Apr 2, 2013 | Finances for Expats

Australia's Superannuation is a Hybrid Retirement Fund Similar to Both Social Security and a 401K.

A minimum of 9.5% of your salary will be contributed to a retirement fund or superannuation. The Superannuation Guarantee (SG) and the minimum contribution will increase gradually from 9.5% to 12% in 2025.

The superannuation contribution is in addition to your salary, not subtracted out. For example, if your salary is $100,000. Your employer contribution to your super will be $9,500. The total your employer is paying you is $109,500, it’s just that that $9,500 is going directly to your super fund.

It is compulsory for employers to make super contributions for their employees. So if you work in Australia, you will have a super fund.

If you want to, you can make contributions to your super in addition to your employer’s contribution. Special note for US expats: Please read this post on Australian Superannuations and US Taxes. It could change your mind on making any contributions to your super fund.

You can claim back your superannuation contribution if you decide to leave Australia and you are not an Australian citizen or a permanent residence visa holder. You will pay 38% tax on your super claim.

If you are an Australian citizen or permanent resident then you can access your super when you reach your preservation age which depends on your date of birth.

Transferring UK Pension to an Australian Superannuation

You can transfer your pension over to your Australian Superannuation if your pension is a Qualifying Recognized Overseas Pension.

Please note on the ATO website it says:

“If a transfer from a UK fund causes you to pay excess contributions tax, you may also be required to pay tax in the UK.” Australian Tax Office

You will need to contact your pension fund to find this out.

There are also conditions for transferring amounts to a complying Australian super fund.

For example, you will need an Australian Tax File Number and to have worked in Australia for at least 40 hours within 30 consecutive days in a financial year.

Pay attention to the fund cap contribution limit.

Before you move to Australia, check with your UK pension fund about transferring.

Then, when you get to Australia, have worked the 40 hours and have an Australian Superannuation set up, contact your Australian super about transferring funds over and ask about the contribution limit. If your UK pension fund is more than your contribution limit then you may need to work something out but I’m sure they can help you with that.

According to the example the Australian Tax Office gives, you can wait until the following year if your pension is over than the contribution limit.

Another things to be aware of is the Six Month Rule.

The Six Month Rule
None of your foreign super interest is treated as applicable fund earnings if you transfer it to Australia within six months of:
becoming a resident of Australia, or
your foreign employment terminating.

Six Month Rule

Claiming Your Superannuation Once You Have Left Australia

Temporary residents, such as 482 or Working Holiday Visa holders, can apply to have their supers paid out once they have left Australia permanently. It's really not so hard to do but you will end up paying Australian tax on the bulk sum of your superannuation.

To receive your superannuation once you move back home you will first need to call your super fund while still in Australia and let them know you are moving back home. Most likely they will send you a form that will need to be filled out and sent back. Be sure that they have your US mailing address on record or whatever address you will be at once you have left Australia, even if it's your mom's address or a close friend.

A PO Box will not work, it needs to be a residential address. You can always change it once you have a more permanent address. This is important as your check will be mailed out to whatever address they have on file.

It takes some time to receive you super and you need to be physically out of the country with your visa cancelled by DIAC. If you move before your visa has expired you can request DIAC to cancel your visa. There is a fee to have it cancelled though so you might want to keep some funds in an Australian bank account and use that to pay for it or you can use a credit card. You will also need to get certified copies of all your entry and departure stamps for Australia in your passport.

To start the process you can fill out your DASP (Departing Australia Superannuation Payment) online. You DASP form then sits and waits to hear from DIAC that you have sent in your 1194 form cancelling your visa. Department of Immigration and Border Control lets the Australian Tax Office (ATO) know that you have left Australia and are not going to be paying taxes anymore. The ATO in turn sends the DASP form and your cancelled visa status to your super fund letting the them know it's ok to release your funds.

If you are moving close to the day your visa expires then you can actually get away with doing nothing at all as once your visa has expired and if you have completed your DASP form online, the whole process mentioned above will be set in motion. Your super fund account firm will then contact you either by email or phone and send out a check to your current address which hopefully you have changed to a current address back home.

This might not be the best option, kind of leaving things a little to open for my taste. A simply call to your super fund manager and they will walk you through what needs to be done. Don't worry, they deal with this issue a lot and will break it down to easy to follow steps.

Can you keep your superannuation in Australia even if you don't live there?

Only if you are a permanent residency visa holder or an Australian Citizen. Department of Immigration and Border Control is very good at keeping the banking institutions up-to-date on your visa status. So if you are a temporary visa holder and your visa has been cancelled chances are your super funds knows.

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