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New International Agreements on Superannuation Contributions

Double Superannuation coverage occurs as a result when an employee works temporarily abroad, while they or their employer have to make super contributions in both countries, in accordance to the legislation of both countries.

Double Superannuation coverage has over the years been a long standing problem for employers and employees around the world. With the increased flexibility of work place assignments and working environment becoming more and more global, the timing for proper management of the Superannuation coverage is gaining momentum and being recognized rapidly by the governments all over the world.

New international agreements, Australia started embarking on since 2002 , rectifies the issue of double Superannuation coverage in a simple and efficient manner. The new agreements are part of the broader Social Security agreements formed between Australia and: Norway, Ireland, Belgium, Croatia, Chile, the Netherlands, Portugal and United States of America. The oldest agreements backdates to October 2002, with Portugal and USA being the first to sign the agreements with Australia.

Under the new agreements between Australia and their counterparts, the employers/employees will only have to contribute to the Superannuation funds once, while the temporary assignment takes place overseas, providing the coverage is in place in the domicile country.

The instrumental document that will enforce the exemption from the double Superannuation contribution is called the “Certificate of coverage”. This document will be issued in Australia upon request, by the Australian Tax Office and will have to be submitted to the authorities overseas as a proof of coverage. This will have to be organized before the employee assumes the overseas assignment.

There are numbers of important issues that the “Certificate of coverage” ensures:

Employer’s commitment to continue contributing to the employee’s fund while the overseas assignment takes place
Payment of Superannuation in accordance with the Superannuation laws
Record keeping of the Superannuation paid into the appropriate Superannuation fund
Enabling the Tax Office to monitor the employer’s legislative duty and cancel the Certificate of coverage if the law is breached i.e. if the employer stops contributing to the fund. In the event, the ATO will also notify the foreign authorities

Links relevant to the article:

To find out more about the social security aspects of the agreements visit www.facsia.gov.au/international
To read about Superannuation guarantee law visit www.ato.gov.au/superprofessionals/content.asp?doc=/content/19818.htm
To read more about the Certificate of Coverage visit www.ato.gov.au/print.asp?doc=/content/20524.htm&page=4#P45_3576

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