Non resident issues can be very complex, but I'll attempt to address your query on the basis they are planning on returning to Australia permanently.
If your son is not returning, then the simple answer is NO, he cannot contribute to the fund.
Your son who is currently a foreign resident, but is looking to return to Australia within the next 5 years. He would like to contribute to a complying superannuation fund in Australia before he returns.
• Is a non-resident able to contribute to an Australian superannuation fund?
• Can a non- resident claim a tax deduction for superannuation contributions made?
Generally a regulated super fund will accept contributions from, or, on behalf of members who are under age 75 if they are still "gainfully employed" and working part-time or full-time.
To be "gainfully employed" is to be employed or self-employed for gain or reward in any business, trade, profession, vocation, calling, occupation or employment.
Part-time employment: gainfully employed for at least 10 hours and less than 30 hours each week.
Full-time employment: gainfully employed for at least 30 hours each week.
In the event that a person ceases to be gainfully employed, the contributions must cease.
However, if the member is under 65, contributions may continue to be accepted for up to two years after cessation of employment (up to age 65).
The requirement to be gainfully employed does not confine activities to those performed in Australia. Therefore, a U.K client is able to contribute to superannuation in Australia if they satisfy both the age and gainful employment criteria.
Ref; SIS Regulation 7.04
SIS Regulation 1.03(1)
The opportunity to claim a personal deduction for superannuation contributions arises when:
• the person has not received any superannuation support in the relevant financial year or
• the person does receives superannuation support but it relates to employment income which is less than 10% of total income, which includes Reportable Fringe Benefits.
Although a foreign employer does not have an obligation to make Superannuation Guarantee contributions for a non-resident employee for work done outside of Australia, this does not necessarily mean the employee does not receive superannuation support. Where the employee does receive some sort of support from the foreign employer, the issue is to determine whether those payments into the foreign retirement fund constitute “superannuation benefits”.
If the employee does receive some superannuation support, it is necessary to determine whether the person meets the 10% rule for the purposes of claiming a tax deduction.
The maximum amount of the tax deduction is limited by the Aged based limit. The tax deduction can be utilised to the extent of the assessable income.
Deductions for Personal contributions
Please check out our "Quick Reference Guide" under "Information" on our homepage.
Please note, provided that a person is entitled to make contributions, there are no legislative provisions that limit the amount of Undeducted Contributions (UDC's) that may be made to a super fund.
Ref; ITAA 1936, Sections 82AAS and 82AAT
ITAA 1936, Section 82AAT
To find out more please call SUPER OUTSOURCE ON 02 9375 2139.