Tucked away in the fine print, well below the $34 billion headline, is an ironic twist: backpackers and 457 visa folk will provide nearly $900 million of those tax cuts.
In a neat raid on superannuation funds with implications about their inefficiencies, the Tax Office will take all employers’ super contributions for temporary residents. Employers will either pay the 9 per cent levy direct to the ATO or to the superannuation funds which must then pass it on.
The treasurer’s media release stresses the upside for temporary residents:
This measure will enable the Government to establish a register of temporary residents’ superannuation, making it easier for them to locate and claim their superannuation. It will also ameliorate the problem of small balances becoming lost in the superannuation system and potentially being eroded by fees and charges.
Very good. And Peter Costello will pick up $877 million for his troubles over the first three years. If temporary residents don’t claim their super back from the ATO within five years of leaving Oz, it goes to the government and that central register should ensure Canberra gets full value from the 30 per cent withholding tax if the backpacker does remember to claim. Nice.
What could have further policy implications though is the implicit admission that the ATO is more efficient that the plethora of super funds when it comes to collecting the super guarantee levy, especially when smaller amounts are involved.
Why restrict this advantage to temporary residents? Well, I suppose you wouldn’t want to get the very rich funds management industry offside during an election, would you?