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Notes on Individual Rules under the Japan-Australia Social Security Agreement

120010010-482-539-657 Last updated date:3 19 2013

1. Australian pension system for totalization

Australian pension system is comprised of the tax-funded Social Security system and the contribution-funded Superannuation Guarantee system. Australian Social Security system alone is subject to the totalization agreement with Japan. Furthermore, under the Agreement, only Japanese old-age pension and Australian Age Pension are subject to totalization.

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2. Crews of ships

Under the Australian Superannuation Guarantee system, if you are an employee on a ship, you will be covered only by the pension system of the country in which your employer is located. Likewise, under the Japanese Employee' Pension Insurance system, if your employer is located in Japan, you will be covered by the Japanese pension system. Therefore, there will not be dual coverage cases which may require establishments of special treatment under the Agreement. That is why there is not any special rule about crews of ships in the Agreement.

3. Treatment for temporary detachment period

Even if a detached worker who is covered by one country works in the other country for more than 5 years, the worker will be granted to be exempt from coverage in the other country. In this case, the period the worker will be exempt from coverage in the country will be for up to 5 years from the date the worker's detachment begins.

4. Treatment for self-employed persons (not subject to arrangement against dual coverage)

Self-employed persons are not subject to the provisions of the elimination of dual coverage under the Agreement. It is because the Superannuation Guarantee system in Australia which is concerned for the elimination of dual coverage covers only employed persons and then dual coverage cases do not happen to self-employed persons.Therefore self-employed persons need not apply for a Certificate of Coverage for the elimination of dual coverage.

5. Detachment to a related company

If you are detached by an Australian employer temporarily to a company in Japan and if your employer and your company are members of the same wholly or majority owned group, you are covered only by the Australian Superannuation Guarantee system and exempted from the Japanese pension system.

6. Extension of the period of exemption

If you need to continue to work as a detached worker in the other country for more than 5 years because of special circumstances including unforeseeable events and serious problems affecting your employer or you, as listed below, you can continuously be covered only by the pension system of the country from which you have been sent if Japan and Australia agree based on an individual examination. (The extension period is not specified.) If the extension of exemption is not granted, you will be covered only by the system of the country in which you work during the period exceeding the initial 5 years. An extension may be granted when:

  • an individual who was scheduled to replace the worker is unable to do so because of death, serious illness or resignation
  • the worker must remain in the country of secondment due to an unexpected personal situation. This includes medical reasons (self, spouse, children) or if the worker's children are required to stay to complete the school year
  • the worker has been under one country's social security system throughout his or her career and is planning to retire in the immediate future
  • the period of extension is for a short period
  • the worker returned to the country of origin for a short period during the period of secondment for unexpected personal reasons. This includes medical reasons (self, spouse, children)
  • the extension for work purposes would be in the national interest of either country
  • the cessation will cause undue hardship to the employer/employee
  • where there has been a reorganization of a company and the worker maintains an important role in the reorganization, or
  • the worker has special skills and/or background and the employer makes a strong case for needing the worker to complete a special assignment or project which will be concluded within 1 to 4 years after the 5 year secondment period.

An extension may also be granted in other special circumstances.

7. Coverage periods totalization for Australian Age Pension

Australian Age Pension benefits are paid to those who have lived in Australia over a certain "residence period" (period of residence of those who are an Australia citizen or hold a permanent visa). If you do not meet the residence requirements, however, you can be eligible for Australian Age Pension benefits by considering the period covered by the Japanese pension system as long as they are not for the same period covered by the Australian pension system. You need to have lived in Australia for over 12 months including 6 or more months consecutively to totalize the Japanese and Australian period for the benefits if you live outside Australia.

8. Australian benefit amounts calculation under the Agreement

Your Australian Age Pension benefit amounts are calculated under both the income and assets tests. According to the provisions of the Japan-Australia Social Security Agreement, part of Japanese pension benefits is subject to the income and assets tests

9. Coverage periods totalization for Japanese benefits

Australian Age Pension benefits are paid based on the residence period. When your Japanese period alone does not meet the eligibility requirements, you can include the period you worked as an employee or self-employed person during your residence period in Australia (the "period of Australian working life residence" specified in the Agreement) as long as the Australian period is not also covered by the Japanese system.

10. When your benefits are entitled and when to file your application

Australian Age Pension benefits are calculated on a daily basis. You will be able to receive benefits on the day you claim for the benefits if you apply for the benefits on or after you reach the pensionable age. Unlike the Japanese pension system, the Australian Age Pension benefits are not payable retroactively to the day you reach the pensionable age.
You can file an application for the Age Pension benefits 13 weeks before you reach the pensionable age.

11. Payments of Australian Age Pension

Australian Age Pension benefits are paid to you every month by either of the following methods.

  1. Direct deposit to your bank account in Japan in Japanese yen
  2. Check in Japanese yen

12. Income tax on Japanese pension benefits in Australia

If you receive Japanese pension benefits in Australia, your Japanese benefits are subject to income tax in Australia and exempt from Japanese income tax.
To be exempt from Japanese income tax under this rule, you must submit two completed "Application form for Income Tax Convention (Form 9)" to the Headquarters of Japan Pension Service. You can download the form from 新規ウインドウで開きます。the Japanese National Tax Agency website.(外部リンク)

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