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Re: DASP tax rate issue

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Amz
Newbie

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Hi,

 

I would be so grateful if someone could shed some light on the below situation for me.

 

My wife and I moved to Australia on a WHV for two years before transitioning to a 457 visa for the remaining 4.5 years.

 

I had earned around 7k in super while on the WHV and I then earned about 51k super on the 457 visa.

 

PRIOR to the new legislation, my wife and I set up a new super fund each (same super company) and transferred all of our 457 balance into the new fund leaving the 7k in the old fund.

 

We continued to work in Australia for another year with the contributions going to our new super funds.

 

We applied for our super pay out last August at the same time. Our original super funds taxed us at 65% which is correct. My wife then received her payout from the 457 fund taxed at the lower 35% which is correct. However I received my super payout which was taxed at 65% (same visa, same contribution timings, same super company as my wife!!)

 

So instead of paying 18k tax on my super, I paid 33k!!!

 

Obviously this was absolutely shocking to us and we immediately queried it with the fund. They first told us to contact the ATO to have it resolved and I told them the ATO do not deal with it until it is in the new financial year. So we lodged a complaint with the fund in September. After chasing, they finally got back to us in January. We explained our situation and the claims officer verbally agreed that the incorrect rate must have been applied and that she would resolve and send us an email with details. One week later she comes back to me on email saying that they will not be refunding us the tax that they incorrectly charged as they believe they are right. She said that because I had a rollover to my fund, they will base the entire fund contributions on when the ORIGINAL fund (completely different fund to them) was set up!!!

 

Correct me if I am wrong but this sounds absolutely ridiculous and I am 100% confident that I meet the criteria for the lower tax rate given that ALL of the contributions in this DASP payment were made on a 457 visa.

 

Advice would be greatly appreciated on this.

 

Thank you.

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Devotee

Replies 3

Hi @Amz 

 

It sounds like your fund is taking the view that because of the rollover there is sufficient basis for determining that the DASP comprises some superannuation contributions attributable to a period when you held the WHV. I guess the thing about a rollover is that it comprises a complete mix of all funds in the account rather than contributions made from a certain date. On that basis the starting balance in the new fund includes a proportion of WHV contributions and a proportion of 457V contributions.

 

E.g. If your account balance was $28,000 when you did the rollover, then 25% of the balance was from WHV contributions and 75% was from 457V contributions. If you rolled over $21,000, then based on the same proportions, the new fund believes it received $5250 WHV contributions and $15,750 457 contributions.

 

I get the sense that you appreciate the way DASP tax is worked out, but if you want more info then this page on the ATO website might help understand the tax rate applicable for WHV:

 

There is an edited ruling published on the ATO legal database also looks at the issue of apportioning DASP when someone has held WHV and another visa while making contributions. I'm having trouble getting the link to work here so you can find it by going to the ATO legal database and searching for "Departing Australia superannuation payment", and selecting "Edited private advice" under the "Refine search by" option.

 

JF

 

This is my personal view; I’m an ATO employee who chooses to help out here in my own time.

 

4 REPLIES 4

Best answer

Devotee

Replies 3

Hi @Amz 

 

It sounds like your fund is taking the view that because of the rollover there is sufficient basis for determining that the DASP comprises some superannuation contributions attributable to a period when you held the WHV. I guess the thing about a rollover is that it comprises a complete mix of all funds in the account rather than contributions made from a certain date. On that basis the starting balance in the new fund includes a proportion of WHV contributions and a proportion of 457V contributions.

 

E.g. If your account balance was $28,000 when you did the rollover, then 25% of the balance was from WHV contributions and 75% was from 457V contributions. If you rolled over $21,000, then based on the same proportions, the new fund believes it received $5250 WHV contributions and $15,750 457 contributions.

 

I get the sense that you appreciate the way DASP tax is worked out, but if you want more info then this page on the ATO website might help understand the tax rate applicable for WHV:

 

There is an edited ruling published on the ATO legal database also looks at the issue of apportioning DASP when someone has held WHV and another visa while making contributions. I'm having trouble getting the link to work here so you can find it by going to the ATO legal database and searching for "Departing Australia superannuation payment", and selecting "Edited private advice" under the "Refine search by" option.

 

JF

 

This is my personal view; I’m an ATO employee who chooses to help out here in my own time.

 

Amz
Newbie

Replies 2

Thank you so much for responding to my query - I appreciate it.

Yeah I think this is the point that they are arguing but in my view it is incorrect so I’m not quite sure how to resolve. Do you know what happens in cases like this, are we able to take the matter further?

I found in the FAQ section on the ATO site the following which also suggests to me that the incorrect rate has been applied and this specifically relates to rollovers:

‘In cases where super funds are not able to determine whether the DASP includes amounts attributable to super contributions made under the WHM visa, for example rollovers, the fund can:

apply the DASP WHM tax rate where the applicant has held WHM visa and no other visas with work rights
apply the DASP ordinary tax rates where the applicant has held WHM visa and other visas with work rights.’

What are your thoughts on the above?

Thanks again!

Moderator

Replies 0

Hi @Amz,

 

Thanks for your post.

 

The Australian Financial Complaints Authority (AFCA) provides dispute resolution for financial services (including superannuation).  You may want to contact them to discuss the outcome of the complaint you lodged with your super fund.

 

Thanks, NicM.

Highlighted

Newbie

Replies 0

Hi @Amz 

 

Did you get anywhere with this?

 

My plan was to do the same as you/your wife - move everything earned whilst on a 457 to a fresh super account, separating out the 417 and 457 earnings in preparation for leaving Aus next year.

 

Best,

J

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