TUESDAY, 20 May 2008 - Super changes for temporary residents proposed by the Federal Government could mean up to $1 billion a year would be diverted to the ATO according to Deloitte Tax Partner, Sarah Lane.

“It’s difficult to calculate precisely, but with over 100,000 skilled workers currently sponsored for a visa by Australian companies and the upward pressure on wages, particularly in the west, $1billion is not out of the question,” Ms Lane said.

“While there is merit in a policy designed to reduce the administrative costs and amount of lost super in the system, this change will significantly affect the attractiveness of Australia as a destination for skilled foreign workers.”

“The Government is seeking feedback on this proposal by next Monday (26 May 2008) and we believe this is a good opportunity to remove the requirement for compulsory super contributions for all temporary residents, not just those individuals covered by specific exemptions.”

“Australian businesses are already struggling to cope with the skills shortage and the need for more executive talent from overseas.”

“We shouldn’t be making it harder for business to compete for overseas talent by introducing such discriminatory measures for temporary residents.”

“The devil is in the detail and when you look closely at these changes, it is clear that super becomes nothing more than a highly-taxed salary deferral scheme with the Government getting the benefit of the deferral.”

“If the Government’s stated concern is lost super then for administrative ease, the temporary resident should be able to claim funds through the final tax return they lodge after leaving the country. That still doesn’t mean the funds should sit with the ATO earning zero interest while the individual is still in the country.”

“Whatever your circumstance, you are going to suffer unfair tax on super if you are a temporary resident.”

“The worst aspect is the proposal that the temporary resident will forfeit super funds if they are not claimed within five years of departure from Australia.”

“This equates to the ATO effectively keeping post-tax remuneration of an employee, legally contracted to be delivered to the temporary resident by the employer.”

Ms Lane said that if the measures were to go ahead, there should be transitional rules for people who have already included super as part of a financial plan.