End the huge 65% super tax on young working holiday makers

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Each year thousands of young overseas workers head to Australia for the famous 2 year 'working holiday', contributing to the local economy through not only tourism, but their labour.

It's estimated the total value of backpackers and working holiday makers is $1.3 billion, with $770M being spent in rural communities. 

Working holiday makers are expected to abide by Australia's laws, including contributing 9.5% of their earnings into Australia's compulsory pension system, superannuation.

When they leave Australia, while they can freely take their take-home pay earnings, they cannot transfer the thousands of dollars of super they are likely to have accumulated to an equivalent pension plan in their country.

This is not the case for Kiwis, who thanks to a trans-tasman portability scheme, are allowed to transfer the full balance of their super to an equivalent pension plan in their home country.

Today, the only option available to a working holiday visa holder, to gain control of their super, is to apply for a Departing Australia Superannuation Payment (DASP). This allows them to cash out their super, but taxes them at the extortionate rate of 65%.

While many nationalities are penalised by this, UK nationals are particularly affected, with over 40,995 landing each year as part of the working holiday visa program. 

For those who were on working holiday visas, then moved to a 457 visa or were sponsored by their work, which results in a slightly less DASP tax, they can still be caught out. This is because if they did not set-up an additional super fund once they got their new visa, all their contributions from both visas are taxed at 65%. 

For every $1 of wealth created in Australia via super, UK Nationals could be penalised up to 65c in the dollar.

UK nationals should be afforded the same right as Kiwis when it comes to transferring their wealth back home.

Young people all over the world are facing a wealth crisis. It is important to end these imbalances, and stop treating UK Nationals as second class tax citizens when it comes to super.

We are calling on Australia's Treasurer Josh Frydenberg and the UK's Rt Hon. Liz Truss MP, Chief Secretary to the Treasury to:

  • Allow working holiday makers from the UK to transfer the full balance of their super back to a pension scheme in the UK
  • Get rid of the 65% DASP tax for Working Holiday makers