Australia has its own retirement system called superannuation. Employers must contribute 12% of your earnings into your superannuation fund. This rate has been in effect since 1 July 2025 and applies for the full 2025–26 financial year. These contributions happen pre-tax up to the concessional cap, and withdrawals become tax-free once you reach preservation age.

Your preservation age ranges between 55 and 60 based on your birth year. You cannot access your super before this age unless you meet specific conditions. These include terminal illness, severe financial hardship, temporary resident status, lost or unclaimed super balances below the ATO threshold (currently AUD $6,000), or compassionate grounds. Illegal early access schemes exist and trigger severe penalties.

But the IRS creates complications Americans don't expect. US tax authorities don't recognize Australian superannuation as a qualified retirement plan. This means contributions and growth may be taxable income for US purposes even though Australia taxes the fund itself at 15%. FBAR applies if your total foreign accounts exceed USD $10,000 at any point during the year.

Temporary residents leaving Australia can claim their super as a Departing Australia Superannuation Payment after your visa expires, though you must submit the claim after leaving the country. New Zealand citizens don't qualify for DASP. Cross-border tax specialists are essential for managing this dual-country retirement complexity.

Important for Americans: US citizens pay a 65% tax on the taxable part of their DASP payment, instead of the usual 35%. The US–Australia tax treaty does not reduce this. This makes DASP less tax-efficient for US citizens, so it’s best to get tax advice before applying.