Superannuation For Foreign Expatriates Working in Australia

ESV MG 3383 027 Copy

Superannuation For Foreign Expatriates Working in Australia


All Australian employers are obligated to contribute superannuation equivalent to 9.5% of the gross wages paid to each employee to the relevant employee’s complying superannuation fund.  This includes foreign expatriates working in Australia, however, certain exemptions may apply meaning the mandatory 9.5% superannuation contributions are not required for qualifying expatriates.


Foreign expatriates who are considering working in Australia, or international companies who are considering sending expatriates to work in Australia, should consider whether the potential superannuation exemptions apply.


An exemption applies to ‘Senior Executives’ who may be establishing a business in Australia or holds a position carrying substantial executive responsibility.  This exemption can include but is not limited to apply where the individual holds a subclass 456 or 457 visa and:

  • the employee is employed as national managing executive, deputy national managing executive, or state manager; or
  • the employee holds a position as a senior executive of a company operating in Australia, where the employee’s position carries substantial executive responsibility, the role is full time and where certain other role specific criteria (eg qualifications) are met.


To apply the ‘Senior Executives’ exemption, the Australian employer will need to “self assess” whether each expatriate satisfies either of the above points and continues to satisfy the criteria. If so, the Australian employer can then apply the exemption and will not be required to contribute the superannuation guarantee amounts in Australia. 


Alternatively an exemption may exist through the application of a bilateral agreement between Australia and the expatriate’s country of origin. Bilateral agreements currently exist between Australia and 23 other countries.


Under the bilateral agreements, the Australian employer is exempt from making superannuation contributions on behalf of the expatriate if the expatriate remains covered by compulsory superannuation contribution in their home country and a certificate of coverage is obtained.


The abovementioned exemptions could result in potentially lower costs to the Australian employer or provide the employer with the ability to increase the expatriate’s gross salary by the 9.5% superannuation component.  This provides the employer with a range of options, however, careful planning is required to ensure that all Australian tax and superannuation regulations are met.


Furthermore, it will also save the foreign expatriate the time and cost in applying to the relevant super fund for their super balances to be paid out on their final departure from Australia.  Paying out superannuation on exit can result in a significant income tax liability.


If you have any questions in relation to the above, or superannuation regulations in Australia in general, please contact your ESV engagement partner on 02 9283 1666.


Article by Daniel Shalala