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  • ENCC release authority

    Once a person makes a valid election to release ENCC from their super interests, we issue an ENCC release authority to each elected super fund.

    The release authority must:

    • state the amount to be released from the super fund, as stated in the election
    • be dated
    • contain any other information that we consider relevant.

    Action taken by the super fund

    Subsection 96-20(1A) of Schedule 1 to the TAA states that the super fund has 21 days from the issue date of an ENCC release authority to pay the person the lesser of the:

    • amount stated in the release authority
    • maximum available release amount.

    Amounts released under an ENCC release authority are paid to the person. Where the person has ATO debts we may issue a garnishee on the payment requiring the super fund to pay us the garnishee amount.

    Where the ENCC release authority is:

    • successful, the super fund must notify the person and us of the amount released within 21 days of issue
    • unsuccessful, the super fund must notify us of the amount released and the reason why they are not required to pay the amount requested within 21 days of issue.

    Action taken by us

    Where an ENCC release authority is unsuccessful we must give the person written notice:

    • identifying the super fund
    • stating how much of the amount stated in the release authority was not paid.

    Where we have notified a person that an ENCC release authority has been unsuccessful they may then elect to release or not to release the unpaid amount within 60 days.

    Compulsory release authority

    A CRA is issued with the ENCC tax assessment and is used by the person to withdraw the amount of tax from their super fund.

    The person cannot use the CRA to release an amount from a defined benefit interest. However, they can use their CRA to obtain money from another super fund even if they did not make contributions to that super fund in the year. If all of their super is in a defined benefit interest, the person will not be able to use the CRA. They will need to pay the ENCC tax liability from their own money.

    Action taken by the person

    Subsection 292-410(2) of the ITAA 1997 provides that the person must give the CRA to the super fund (other than a defined benefit interest) within 21 days after the date of the CRA.

    A person can direct their super fund to release money either to themselves or directly to us. However, payment of the ENCC tax assessment must be made by the payment date or GIC will accrue on the outstanding amount.

    Payment received from the person

    Where the person has chosen to release the money to themselves, they may make payment to us from their own money or wait until the money is released from the super fund.

    Once payment is received by us it must be credited to the person’s ENCC debt. The credit arises on the day we receive the amount.

    Example 4.2

    Louise receives a CRA with her ENCC tax assessment.

    She has 21 days to provide the CRA to her super fund.

    Louise chooses to have the money released to herself rather than us. However, she must still make the payment by the payment date or GIC will accrue.

    End of example

    Action taken by the super fund

    Super funds are required to pay the amount within 30 days of receiving the CRA.

    The super fund must pay the lesser of the:

    • amount of ENCC tax stated on the CRA, or
    • sum of the values of every super interest (other than a defined benefit interest) held for the person.

    Subsection 292-415(5) of the ITAA 1997 states that the proportioning rule, which determines what proportions of super benefit components are paid out, does not apply to amounts paid under a CRA.

    The super fund is required, under section 390-65 of Schedule 1 to the TAA, to report to us details of any amounts paid in line with a CRA.

    The statement must be given to us within 30 days after the amount has been paid from the fund, be in an approved form and must include at a minimum, the:

    • amount paid
    • details in relation to the super fund
    • person in respect of whom the released amount was given to us.

    A copy of this statement must also be given to the person to whom the CRA relates within the same timeframe. The approved form is the same document as the CRA. The super fund does not have to use our release authorities, but must report all the information required in the approved form.

    A super fund does not have to re-report the amount that is released.

    Payment received from the super fund

    Payments made to us by a super fund are taken to be made in satisfaction (in whole or in part) of the person’s ENCC tax liability stated in the release authority, in line with subsection 292-415(3) of the ITAA 1997.

    Once payment is received we must credit any amount paid by the super funds to the person. The credit arises on the day we receive the amount.

    Authority to release excess contributions

    When the person has not complied with the CRA to remove the ENCC from their super fund, we can issue an authority to release. This release authority is given directly by us to the person’s super fund to remove the amount of the ENCC tax liability from their super fund.

    Under subsection 292-410(3) and subsection 292-410(4) of the ITAA 1997, we may give a release authority to one or more super funds that hold a super interest (other than a defined benefit interest) for the person if:

    • the release authority is for ENCC tax
    • a super fund holds a super interest for a person (other than a defined benefit interest)
    • any of the following conditions are satisfied  
      • the person does not give the CRA to a super fund holding a super interest for the person in a complying super plan within 90 days after the date of the CRA
      • if the person has made one or more requests as mentioned in paragraph 292-415(1)(a) in relation to the CRA within 90 days after the date of the CRA, the total of the amounts (if any) paid by super funds in relation to the CRA falls short of the amount of the ENCC tax stated in the CRA
      • the total of the values of every super interest (other than a defined benefit interest) held for the person by a super fund to which the release authority is given falls short of the amount of the ENCC tax stated in the CRA.
       

    Accessing amounts exceeding the authorised amount

    Subsection 304-15(4) of the ITAA 1997 states that where a person accesses more than the amount authorised for release, that amount will be included in their assessable income and subject to income tax at their marginal tax rate.

    Exercise 16

    Is the following statement true or false?

    The CRA issued with the ENCC tax assessment is used by the person to elect if they want to withdraw an amount from their super interest.

    Answer 16

    False. A CRA is issued with the ENCC tax assessment which requires the person to withdraw the amount of ENCC tax from their super funds.

      Last modified: 28 Mar 2018QC 50732