Explanatory Memorandum
(Circulated by authority of the Treasurer, the Hon Peter Costello, MP)PART 2 - Superannuation Contributions Tax (Members of Constitutionally Protected Superannuation Funds) Imposition Bill 1997
Part 2 of the Explanatory Memorandum (Chapter 8) explains the provisions of the Superannuation Contributions Tax (Members of Constitutionally Protected Superannuation Funds) Imposition Bill 1997.
Chapter 8 - Superannuation Contributions Tax (Members of Constitutionally Protected Superannuation Funds) Imposition Bill 1997
8.1 This Bill imposes the superannuation contributions surcharge and declares the rate of surcharge. The assessment of the superannuation contributions surcharge for members of constitutionally protected superannuation funds is dealt with in the Superannuation Contributions Tax (Members of Constitutionally Protected Funds) Assessment and Collection Bill 1997.
Explanation of the provisions
Title and commencement of the Act
8.2 When the Bill is enacted it will be called the Superannuation Contributions Tax (Members of Constitutionally Protected Superannuation Funds) Imposition Act 1997. [Clause 1]
8.3 The Act is to commence on the day it receives the Royal Assent. [Clause 2]
8.4 Terms used in the Superannuation Contributions Tax (Members of Constitutionally Protected Superannuation Funds) Imposition Bill 1997 are defined in the Superannuation Contributions Tax (Members of Constitutionally Protected Funds) Assessment and Collection Bill 1997and are explained in Chapter 7. [Clause 3]
8.5 Clause 4 imposes a superannuation contributions surcharge on a member's surchargeable contributions for a financial year. The meaning of 'surchargeable contributions' is discussed in paragraphs 2.3 - 2.12.
8.6 If the member has surchargeable contributions and has quoted his or her tax file number to the Commissioner, the rate of surcharge is determined by the member's adjusted taxable income. The meaning of 'adjusted taxable income' is discussed in paragraph 2.14.
8.7 If, in the 1996-97 financial year, the member's adjusted taxable income is $70,000 or less, no surcharge is payable.
8.8 If the member's adjusted taxable income is in the range $70,001 to $84,999, the rate of surcharge is the percentage of his or her surchargeable contributions worked out using the formula:
Relevant adjusted taxable income - $70,000 / $1,000
Subclause 5(1)]
Example
8.9 Toni's adjusted taxable income for the 1996-97 financial year is $82,500. The rate of surcharge payable on Toni's surchargeable contributions is:
$82,500 - $70,000 / $1,000 = 12.5%
8.10 The percentage calculated under subclause 5(1) is rounded to 5 decimal places. [Subclause 5(2)]
8.11 If the member's adjusted taxable income is $85,000 or more, the rate of surcharge is 15% of his or her surchargeable contributions. [Subclause 5(3)] This amount is indexed by movements in full-time adult average weekly ordinary time earnings. [Clause 7]
8.12 If the member has not quoted his or her tax file number (TFN) to the Commissioner and the Commissioner:
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- has not, after taking all reasonable steps, found out the member's TFN; and
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- has written to the member advising that failure to quote his or her TFN may result in the surcharge applying at the rate of 15 per cent.
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- if the member was a member of the fund before 7 May 1997 and the surchargeable contributions exceed the surchargeable contributions threshold ($2,000) - the rate of surcharge is 15 per cent;
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- if the member was a member of the fund before 7 May 1997 and the surchargeable contributions do not exceed the surchargeable contributions threshold - the surcharge will be nil.
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- if the member was not a member of the fund before 7 May 1997 and the Commissioner has written a further letter to the member advising the consequences of failing to quote a TFN - the rate of surcharge is 15 per cent.
Subclauses 5(4) and (5)]
8.13 The surchargeable contributions threshold ($2,000 for the 1996-97 financial year) is indexed by movements in the charge percentage under the Superannuation Guarantee (Administration) Act 1992 . [Clause 6]