The Government has decided to continue an exemption from the Superannuation Guarantee (SG) for employers in respect of certain non-resident senior executives who meet the criteria for the former Class 413 (executive (overseas)) visa.
Reflecting the findings of the Committee of Inquiry into the Temporary Entry of Business People and Highly Skilled Specialists (the Roach Committee), a new single visa class has been introduced for all business entrants from 1 August 1996. The single business entry visa class (or temporary entry permit (TEP) code number 457 under the Migration Regulations) has replaced a range of separate visa classes which previously applied, including the Class 413 (executive (overseas)) visa. There is currently no provision for an SG exemption for this new visa class.
Employers of holders of a Class 413 (executive (overseas)) visa were excluded from being required to make SG contributions on their behalf because the executives are usually in Australia for only short periods and have retirement income arrangements in place in their home countries. These individuals are typically brought to Australia because of their unique specialist skills and experience.
For these reasons, the Government will introduce legislation with effect from 1 August 1996 to continue the SG exemption for employers of executives who meet the criteria for the former Class 413 (executive (overseas)) visa. The exemption will not extend to spouses and dependents. Nor will the exemption apply to the much larger number of Class 457 business temporary entry visa holders as to do so would be likely to give rise to labour market distortions by making non-residents cheaper to employ than similarly skilled Australians. Favouring non-residents in this way would not conform with the Government's job creation priorities for Australians.
The Government has also received representations from non-residents affected by the changes to the presentation rules which, from 1 July 1997, will require superannuation benefits to be presented until they reach presentation age, even if they have permanently left Australia. This 1997-98 Budget measure is broadly consistent with overseas practice.
In recognition of their concerns the Government, through the Department of Social Security, has entered into negotiations with other countries to include provisions within bilateral social security agreements that would exempt employers of temporary non-residents from each country's compulsory contributory pension schemes. Such arrangements are common practice amongst most industrialized countries.
A number of the representations have called for arrangements to be put in place to allow non-residents to transfer superannuation monies to an approved pension fund in their home country which has equivalent presentation arrangements. The Australian Government would be prepared to negotiate such arrangements with other countries on a reciprocal basis, that is, in return Australians leaving foreign countries could transfer their pension entitlements back to Australia to approved superannuation funds.
Affected non-residents may wish to draw their concerns to the attention of the relevant authorities in their home country to facilitate the process of bilateral negotiations on these issues.
CANBERRA
25 June 1997