A big superannuation disadvantage existed for fly-in fly-out resources professionals working overseas for a foreign company. The foreign company is not obliged and probably not able to make superannuation contributions and the professional was not able to make deductible personal contributions.
The problem for an overseas FIFO professional was this:
- She is likely a resident of Australia for tax purposes
- The foreign employer can’t or won’t make superannuation contributions
- The mining professional would like to get tax deductions for personal contributions
- The requirement was, in effect, to be ‘self-employed’ and satisfy the 10% test
- That test requires less than 10% of overall income to come from ‘employment’
- The FIFO arrangement was deemed ‘employment’ for super guarantee purposes
- The 10% rule could not be met
- Reasonable and substantial tax deductions are not available and
- She is assessed for tax in Australia on the foreign income.
The Government announced Budget measures to fix this problem in May 2017. Good news! They have now eliminated the 10% test and, provided the contribution is to a complying superannuation fund and the appropriate paperwork is completed, a deduction is available for the FIFO worker.
Always seek specific advice tailored to you own affairs before making financial decisions.
12 September 2017
Andrew Lovett
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