RS 02002.005 Scope of Agreement with Australia
A. POLICY – UNITED STATES
For the United States, the agreement applies to Social Security taxes that support the retirement, survivors, disability and health insurance (RSDHI) programs (i.e., FICA taxes for employment and SECA taxes for self-employment, including the Medicare portion). Thus, if an individual is exempt from U.S. Social Security coverage under this agreement, neither the employee and employer share of the FICA tax nor the SECA tax, in the case of a self-employed person, has to be paid.
B. POLICY – AUSTRALIA
For Australia, the agreement applies to the contributions that employers must make to employees' private retirement accounts under a program known as Superannuation Guarantee (SG). If a worker is exempt from Australian coverage as a result of the agreement, no SG contributions are due.
NOTE: Australia's basic Social Security program, which is separate from the SG program, is funded through general revenues. The agreement does not eliminate the taxes that finance the Australian Social Security program.