Senator Nick Sherry, Minister for Superannuation and Corporate Law, has expressed serious concern at moves in the Senate, led by Senator Nick Xenophon and supported by Malcolm Turnbull and Julie Bishop, to gut up to $860 million from a critical Budget measure.
The Senate will vote on Monday on an amendment moved by Senator Xenophon, and supported by the Opposition, that would allow high-income foreign workers to build up highly tax-concessioned superannuation savings while working in Australia, return to their home country, then claim their super at age 60 – all tax free and all at the Australian taxpayer’s expense.
“The net effect of this is a legislative tax rort for wealthy foreign workers that will cost the Budget up to $860 million, will encourage rich non-citizens to take advantage of our generous super system and will cost the Australian community much needed Budget certainty during a time of global financial crisis.”
“Whilst I am disappointed that Senator Xenophon has moved this amendment, it must be Malcolm Turnbull and Julie Bishop that hang their heads in shame.”
“The Liberal Opposition is supporting tax breaks for wealthy foreigners while the Rudd Government is trying to manage the Budget in tough times. The global financial crisis has reduced the Budget surplus by $40 billion, now the reckless Malcolm Turnbull and the hapless Julie Bishop are going to rip up to another $860 million away,” said Minister Sherry.
The temporary residents’ legislation was first proposed by the former Coalition Government, and provides that the superannuation of a temporary resident will become unclaimed and payable to the Australian Tax Office after the individual has departed Australia permanently and at least six months have passed and they have not claimed their savings. Departed temporary residents can later claim back their money at any time as their unclaimed super money will remain on account with the ATO and would be repaid after normal departure taxes are paid.
The amendment, to be voted on in the Senate on Monday afternoon, would allow a high income temporary resident to build a superannuation account in Australia made up of their employer’s compulsory 9 per cent employer contributions and any voluntary salary sacrifice contributions they make of up to $100,000 a year – all taxed at 15 per cent.
Under the amended Bill, on their departure from Australia the worker would be able to leave all their super contributions, both compulsory and voluntary, in their superannuation fund, then at age 60 claim it all back tax free.
“We know of no where else in the world where such a rort exists, let alone where it has been intentionally been put in the law.”
“This move will set up an unfair tax break for international high rollers who have no intention of retiring in Australia and who want to have their retirement fund paid for by the Australian taxpayer.”
“Could there be a clearer example of just how out of touch Malcolm Turnbull is with real Australia? The Rudd Government wants to use tax-payers money for infrastructure, schools and hospitals, and Mr Turnbull wants to give our money away to his high-roller mates,” said Minister Sherry.
The amendment that the Coalition wants to support is also unprecedented in the powers it would give to the Tax Commissioner and is unworkable and unachievable.
“I call on Mr Turnbull to do the right thing on Monday afternoon. There is still time for him to change his mind and instead vote against this amendment and for responsible economic management for Australia,” said Minister Sherry.