Australian superannuation is not the easiest thing for a newbie backpacker to comprehend.
So you’ve made it to Australia. You’ve found yourself a job. You’re beyond ecstatic at the thought of that sweet sweet minimum wage (HELLO $21 an hour).
How the hell am I supposed to fill out these employment forms? Am I a resident for tax purposes? And what on earth is this ‘super’ that everyone keeps going on about?
I found it incredibly confusing when I eventually decided to get a job. And I ain’t stupid (most of the time).
In this post, I’ll go through the process of starting work in Australia, in an easy step-by-step guide. I’ll cover:
What you need before you start work
What exactly Australian superannuation is
How super works
What’s different about superannuation for backpackers
How to fill in your employment forms (including explanations of the hundreds of acronyms used in Oz)
How to claim your super at the end of your visa
An Overview of Australian Superannuation
Working holiday visas (visas 417 and 462) allow you to work while you travel in Australia. You can work for up to six months with one employer. Sometimes you can work longer than that if you a) fulfil certain criteria, and b) clear it with the Department of Immigration. Or, if your employer has different branches or premises, you can work up to six months at each.
Click here to find the form to apply for a six-month extension of work with the same employer.
Backpackers can also work towards getting a second year working holiday. I’ve explained the process in detail in my Complete Guide: click here to read it!
There are a few things that you need in order to begin work in Oz.
First of all you will need a Tax File Number.
(Unless you want to pay more tax than necessary. Which you don’t).
It’s best to apply for this upon arrival into Australia, so you have it ready when you decide to get a job. It can take up to 28 days to be sent to you, and you have up to 28 days to give it to your employer after you’ve started work.
You will also need an Australian bank account, so your wages can be paid to you. The main ones backpackers use are Commonwealth, ANZ, NAB and Westpac. You can start the process of applying for a bank account before you arrive into Australia, which I would highly recommend. However, it is also pretty easy to do once you get here.
I covered the process of applying for your TFN and bank account in my Ultimate Guide to Your Australian Working Holiday, which you can find here.
Finally, you will need a superannuation account.
What the Eff is Super?
Okay so before I get into setting up your superannuation, let me just explain what it is.
Superannuation (a.k.a. ‘super’) is essentially a fund that, for Australians, works like a kind of pension. Your employer pays into it throughout your working life, and then when you retire you can access the money as a replacement of income.
The great thing about super is that it doesn’t discriminate. Backpackers can get it too, despite the very marginal likelihood that they will be staying in Oz long enough to retire. Employees who earn over $450/week (highly likely) are entitled to employer contributions of 9.5% of what they earn, over and above their income.
That is, it does not come out of your wages. It is worked out as a percentage of your wages, and then paid on top of them. Great, right?
You can’t actually access this money until you leave Australia for good. And as of 1 July 2017, it is taxed a hell of a lot (um, 65%, ouch) before you see any of it. But still, think of it like extra free money. A little savings account that you don’t even have to think about. Or a parting gift from Australia to you.
Setting up your super
You don’t actually need to set up an account before you start work, as all companies will have a superannuation company that they prefer. So if you don’t have a super account, you will have an account automatically set up with your employer’s chosen provider.
However, there are a few problems with this. First of all, if you’ve just arrived, you will have only the vaguest idea of what super actually is, and therefore you are more likely just to ignore and/or forget about it. Seeing as your super will amount to extra money when you leave Australia, this is a bit daft.
Secondly, it is likely that you, as a backpacker, are going to have more than one job in the course of your visa. For example, at 10 months into my visa, I’d had five different employers. Unless you get a handle on your super early on, you will have the total headache of having multiple accounts, with multiple superannuation companies. Each of these might have a different online account system, different customer or member numbers, and who knows how much money in each.
All super accounts have fees attached to them (i.e. they take money from the account as payment for ‘handling’ them), so you are losing more money than you need to if you have more than one account.
In short, you definitely don’t want to have multiple super accounts, as this will eventually become a pain in the arse.
Combining your accounts takes time and effort. You will hate yourself for having not been organised, when you later have to rummage through paperwork to figure out how to access each account, what your member numbers and passwords are, and how much money you actually have in them. Plus you will probably have to endure a lot of annoying legal babble on the phone.
Trust me. I had to do it and it was very boring.
ANYWAY. The best thing to do is to have one set up and ready for when you start work, so you have a head start on the whole thing.
I would highly, highly recommend just setting up a super account with your bank. This is because you will then have all your finances in one place, and it will be easily accessible. Most Australian banks have really (honestly) great customer service, and great online banking apps.
And they are used to backpackers coming in and being clueless.
The other reason I’d go with your bank is that you are probably only in Australia for a maximum of two years. Therefore, the projected benefits of going with other super companies will not make that much difference. It might matter more if you’re paying in throughout your working life – but you probably aren’t. Ease of use is really the most important thing for backpackers.
Want to sort out your second year visa? Click here for my complete guide
So, just go into your bank, and ask if you can set up a super account with them.
Transferring or consolidating your super
If you (like me) are in the unfortunate position of already being in possession of several super accounts, don’t worry. You can still set up an account with your bank as above. Then all you have to do is go through the slightly mind-numbing process of consolidating your different accounts into one.
If you’re lucky, you’ll be able to do a superannuation search through the bank, and just click a magical ‘consolidate my super’ button to have it all sorted out. However, I wasn’t that lucky, and had to go the long way around, which is as follows.
To consolidate (combine) your accounts, you will need to find out the names of your existing super accounts, as well as your customer number or member number. You will then get a form from your bank, fill in your information, and give it back to the bank.
An alternative option is giving the bank this information over the phone (but this will involve a lot more patience!).
I won’t lie, it’s not always easy to find out your super account information. Usually you will have had a welcome pack sent to you in the post, but it doesn’t always work like that. Or you might have lost the form, or the address you gave the company might have been an old one… there are a lot of scenarios that will make life more difficult.
If it’s not obvious, try asking your employer, or contacting the super company with all the information you have, and you should be able to find it.
It is also possible to find your super through your MyGov account, which can be set up online using your TFN. If you log into your account, then go into MyTax, you can view your super under the ‘Super’ tab. They can do a superannuation search and find all of the accounts held by one TFN. However, the information held by the ATO might not be up to date… mine wasn’t!
So, where is my super?
Yet another spanner in the works is the fact that your super may just not yet be in your account.
Employers only have to pay your super once each quarter, so you might have to wait for this to happen before you can actually access your account information. It sucks, I know. This may also explain why there is no record of your super online, even if you have tried consolidating it through the ATO.
(Yet another reason why it’s best to set up your own super before you start work!)
If this is the case, it’s just a waiting game! The steps to combining your accounts will then just take a really long time, unfortunately.
Once you do have all the necessary info, I would HIGHLY recommend writing it down somewhere safe so that you don’t have to faff around rummaging through paperwork the next time you might need it!
When you’re set up with all of this boring stuff, there are just a few more steps to go before the fun process of filling your bank account with plenty of beer money.
Filling in those pesky forms
When you first start your job, your employer will usually present you with some forms to fill in. They should come with additional pages explaining how to answer each question, but I’ve done some explaining below anyway – in plain English!
Tax File Number Declaration
The first form is your Tax File Number Declaration form. Here you will fill in your TFN, and declare whether you are a resident for tax purposes or not.
The form should look something like this:
The first few sections should be pretty straightforward. Fill in your TFN at the top, then your name, date of birth, and address. Your address will just be wherever you are living at the moment – it can be a hostel, campsite, whatever.
Then tick the relevant box for the type of work you are undertaking:
Full time = contracted hours per week, on average 38 hours
Part time = contracted hours per week, on average less than 38 hours
Casual = no fixed, regular hours. Entitled to higher hourly pay (+25%).
Take a look at this page on the Fair Work website to find out more.
Now the age old backpacker question: am I a resident for tax purposes?
Well, it’s complicated.
However, one thing has been made easy by the recent changes to Australian tax law. All (I repeat, ALL) working holidaymakers are now taxed at a blanket rate of 15% from the first dollar you earn. Up to $37,000, that is, after which the usual foreign resident rates apply. So, there is no longer a real advantage to claiming that you are a resident for tax purposes.
Most backpackers will NOT be considered a resident for tax purposes. They will move around the country, take short term jobs, and generally behave in line with temporary residency. Most do not intend to stay in Oz longer than the length of their visa, so will not behave in the way that a person intending to be a long term resident would.
However, if you are intending to stay in Australia long-term, then you can be a resident for tax purposes. This might mean that you are seeking sponsorship, or stay in one place for six months or more, or that you don’t intend to return home. Usually, you shouldn’t tick the ‘yes’ box unless you have already been in Oz six months. Obviously it is hard to prove an intention to stay somewhere a long time, when you’ve only just arrived.
Whichever category you fit, it no longer makes much difference to how you are taxed. So no dramas! Don’t stress about this too much.
The next question is “Do you want to claim the tax-free threshold from this payer?”
This should be answered ‘no’, as backpackers can no longer claim the tax-free threshold. Even if you tick ‘yes’, you won’t get it!
The tax-free threshold, as explained in my guide to the backpacker tax return, basically means that Australian residents get the first $18 200 of their income tax-free. So, if they are taxed on this money, they get to claim it back at the end of the year when they do their tax return. It used to be the case that (some) backpackers could also claim this threshold – but the government has now (unsurprisingly) put a stop to this.
The next three questions will all be answered no, for obvious reasons. (You are not a pensioner, nor do you have Australian student debt, I should think).
Superannuation Standard Choice
You will also be given a Superannuation Standard Choice form. This is where you’ll fill in the details of your chosen superannuation provider – hopefully, if you’ve set one up! Alternatively, it’s where you will agree to use your employer’s chosen provider.
The form will look like this:
And again, it should come with supporting pages to help you fill it in. However, in basic terms:
For section 1, tick the first box if you have set up your own super account already. Tick the third box if you don’t have your own account, and want to use your employer’s preference.
(Again, I’d recommend you have your own one set up with your bank!)
And just FYI:
ABN = Australian Business Number. All companies and employers have one of these.
APRA = Australian Prudential Regulation Authority.
Basically an APRA fund is one that is approved and regulated by the APRA – you can double check whether yours is by going to http://superfundlookup.gov.au/ and searching it by name or ABN. This is also useful if you can’t figure out what the required details of your super account are, for filling in the form.
RSA = Retirement savings account. Fairly unlikely that a backpacker will have one of these?
SMSF = Self-managed super fund. You definitely won’t have one of these, way too complicated!
Then fill in your name and TFN for section 2.
If you ticked the first box in section 1, fill in the details of your super account in for section 3. Use the link above if you don’t know the address or other details of the fund. If you ticked the third box in section 1, skip this question.
Ignore section 4! Skip to section 5, to sign and date your form.
And you’re done!
Hand this form (and your TFN Declaration form) to your employer as soon as possible. The sooner you give them in, the sooner you can get paid and start getting super contributions!
Claiming back your super
Now, as I mentioned above, the good thing about being a backpacker is that we can claim our super back when we leave the country for good. This is called a Departing Australia superannuation payment (DASP for short).
Free money! Yay!
You can only do this once, and it explicitly has to be when you are leaving FOR GOOD. So if you think you might want to come back for a second year, wait until you know for sure before you do it.
You can only claim a DASP after you have a) left Australia and b) your visa has expired or been cancelled.
To cancel your visa, you can fill in this form and send it off via email.
However, you can actually start the process of applying for a DASP while still in Oz. The ATO actually suggests that you do this, so that you can ensure you have all the relevant documentation ready. If your super claim is for $5000 or more, you will require certified copies of your documents – which are easier to sort out when you’re still in Oz!
To begin your application for a DASP, click here. You will have to have the following information ready:
- Name, date of birth and other personal details.
- Email address
- Passport information (country and number)
- Tax File Number
- Details of your superannuation account
- Details of your visa
If you are yet to leave Australia, or your visa is yet to expire, you won’t be able to actually submit the claim. But, you can fill everything in, and then you will be able to submit it later.
If you have been outside of Australia for six months or more, your super will be transferred over to the ATO. However, don’t panic! You can still get it back through submitting a DASP.
Now the bad news. DASPs are taxed a shitload. 65% to be precise. That’s as of 1st July 2017. Sorry about that. It’s just something we have to deal with.
Aaaand that’s everything! Let me know if you have any other questions about working in Oz in the comments below, and I will do my best to answer. I’ve provided a few links below for reference, in case you want to read more on the topic. And if you’ve found this helpful, please subscribe for more of the good stuff!
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If you want more information on anything discussed above, here are some of the links that I’ve used throughout this post!