Super for Inpats

[Cottoneyes]

Hi,

Just wondering how other companies handle super on inpats from countries that we do not have a bilateral agreement with and do not fall under the executive exemption.

Is the super to be paid typically included in the package at the commencement of the assignment?
Is the super that the employee will be eligible to cash in at the end of the assignment taken back through the assignment through a hypo tax situation?
Is the employee getting it on top of the assignment package as a bonus if you will?

[Tiger]

This information may assist in relation to your legal obligations around SGC Super (now 9.5%):

Employers do NOT have to contribute SGC Super to –

· non-residents being paid for work done outside Australia

· covered by bilateral superannuation agreements with other countries

· certain senior foreign executives who hold Class 413 temporary visa or entry permits, or

· Resident employees paid by non-resident employers for work done outside of Australia

The 2013/2014 upper salary limit threshold above which SGC was not payable was $48,040 per quarter or $192,160 pa. I've not yet checked on what the 2014/15 upper limit is but it increases every year. Where you have senior staff on the big money who are eligible for the SGC, you have to remember to cut it off at the quarter earnings limit (if you pay your super quarterly) or once the salary hits the upper limit in latter half of the tax year.

Of course once (if) your inpats become Australian residents, then for super purposes they are essentially treated as Australians.

Where companies are dealing with both ex and inpats, best to use a specialist international employment firm eg PWC to avoid pitfalls on what must be done in certain countries and how to offset what is done in Australia but not overseas and vice versa. EG if you have inpats from a country with no bilateral agreement, consider what they get in their own country - what payroll are you going to have them on (your Australian or leave them on their own country's payroll) and you may well decide to pay super. However, when end of their visa is up and they are leaving the country, they then have to apply to the ATO to be reimbursed the super once they have left the country. So, yes, to some extent, you might consider this a bonus.

Hope this helps
Tiger

[Cottoneyes]

Thanks Tiger, it goes with my thinking, however as a company there is no practice at the moment to cap the super at the quarterly limits for any other employees and we bring in the quarterly limits for the inpats, then we are creating a reportable super issue for those employees not inpatted who are paid super above the quarterly limit. The quarterly limit is also a quarterly limit, you cannot cut it off in the final part of the year as you are breaching the contributions for the final quarter if taking this method.

I haven't tried PWC as yet, however have tried one of the other big 4 and a salary survey company without success. Will see if the company is prepared to deal with another firm

[Tiger]

An alternative to cutting off last quarter (or when contributions have reached the max - upper limit earnings cut off for 2014/15 is $197,720 pa or $49,430 pq.) is to average the monthly (assuming monthly paid) contribution based on current salary at start of financial year so that it does not exceed the upper limit threshold. Of course, this way, it could still go over if these guys get a pay increase thru the year. Must say Wow that you pay unlimited super - sounds like a great place to work!

What impressed with PWC is they have modelling done for most foreign countries in relation to tax, benefits (pertinent to that country), cost of living, etc so tell them you are sending someone to Canada and bingo you have all the numbers you need immediately - they update regularly based on exchange rates etc. Really takes the pain out of the exercise as I've found often company local accountants just are not up to this foreign country financial stuff. Part of PWC's service included meet with employee before they leave and again when they return, to assist them with their final and returning tax returns.
Tiger