Part II is intended to eliminate dual coverage, the situation that occurs when a worker is covered under the laws of both countries with respect to the same services. In so doing, the Agreement preserves the existing coverage provisions of the laws of both countries to the greatest extent possible. The provisions in this Part are intended to eliminate dual coverage by continuing the worker's coverage and taxation under the system of the country to whose economy he or she has the more direct connection and exempting the worker from coverage and taxation under the other country's system.
A worker who is subject only to Australian laws by virtue of Part II of the Agreement will be exempt, together with his or her employer, from U.S. Social Security contributions and from hospital insurance contributions under Medicare. When a worker is subject only to U.S. laws, the worker's employer will be exempt from paying Superannuation Guarantee (SG) contributions. (The provisions of Part II do not apply to the Australian Social Security program since it is financed from general revenues. See annotation to Article 2.1(b).)
Article 6.2 establishes a general rule for eliminating dual coverage and contributions for persons employed in either the United States or Australia. Article 6.3 contains an exception to this general rule, which applies in the case of employees sent by an employer in one country to work temporarily in the other country. Articles 6.7 and 6.8 provide for the elimination of dual coverage in the case of self employed persons. Article 6.10 precludes dual coverage that might otherwise occur for employees in international shipping and air transportation. Articles 6.11 and 6.12 establish rules applicable to persons employed in U.S. or Australian Government service.