Explanatory Memorandum
(Circulated by authority of the Treasurer, the Hon Peter Costello, MP)Chapter 6 - Assessments of surcharge
Purpose of the amendments
6.1 The amendments are made to:
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- clearly distinguish between the making of an assessment and the assessment notice;
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- support the making of, and the electronic transmission of, assessments;
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- provide that the validity of an assessment (and determination of advance instalment where appropriate) is not affected by any non-compliance with a provision of the surcharge Acts;
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- limit the time in which the Commissioner can amend an assessment under the Assessment and Collection Acts and the TP(A & C)Act (the time limit does not apply to amendments made to assessments calculated at the highest rate because the member has not quoted a Tax File Number); and
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- expand the objection provisons and remove current limits on the rights of members and providers to object against surcharge assessments.
Background to the legislation
6.2 Sections 15 and 14 respectively of the Assessment and Collection Acts and section 11 of the TP(A & C) Act provide for a process of assessment and the information to be included in an assessment. The sections also set out how assessment information is to be given to providers and members.
6.3 Sections 15 respectively of the Assessment and Collection Acts and section 11 of TP(A & C) Act also set out the day that surcharge is payable.
6.4 Regulation 14 of the Superannuation Contributions Tax (Assessment and Collection) Regulations and regulation 15 of the Superannuation Contributions Tax (Members of Constitutionally Protected Superannuation Funds) Assessment and Collection Regulations allow the Commissioner to serve notices electronically.
6.5 As there is no time limit for amending surcharge assessments, the Commissioner, funds and members incur additional costs by having to retain records for significant periods of time in order to resolve disputes that may arise many years after assessments have issued and been paid.
6.6 Subsections 40(3) and 34(3) respectively of the Assessment and Collection Acts and section 28 of the TP(A & C)Act that set a period for which records are to be retained are inconsistent with an unlimited time in which amendments can be made.
6.7 Sections 24 and 20 respectively of the Assessment and Collection Acts also allow a member of a superannuation fund who is dissatisfied with a surcharge assessment, to object against the assessment if it relates to the calculation of the members adjusted taxable income. A superannuation provider is able to object against a member's assessment provided that the member is dissatisfied. If the member is not dissatisfied, a superannuation provider may have no objection rights.
Explanation of the amendments
6.8 New subsections 15(1), (2) and (5) to (12) and new section 14 respectively of the Assessment and Collection Acts and new subsections 11(1) and (3) to (5) of the TP(A & C) Act:
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- identify the process of making an assessment;
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- change some references to an assessment to references to a notice of assessment where appropriate;
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- change some references to a copy of an assessment to references to a notice of assessment where appropriate;
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- support the making and the electronic transmission of assessments; and
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- ensure minor defects do not affect the validity of an assessment (or determination of advance instalment, where appropriate). [Items 6, 13 and 14 of Schedule 1, Item 8 of Schedule 2 and Items 2 and 3 of Schedule 3]
6.9 Minor consequential amendments are made in new paragraphs 18(1)(a) and (c) of the SCT(A & C) Act. [Item 17 of Schedule 1]
6.10 The definitions of assessment and determination in section 43 of the SCT(A & C) Act, assessment in section 38 of the CP(A & C) Act and assessment in section 31 of the TP(A & C) Act are amended to reflect the changes. [Items 29 and 32 of Schedule 1, Item 16 of Schedule 2 and Item 6 of Schedule 3] .
Limiting the time for amendment
6.11 New sections 17A and 15A respectively of the Assessment and Collection Acts and new section 11A of the TP(A & C) Act limit the time in which an amendment can be made to 4 years from the date of issue of the assessment (for a debit amendment) and 4 years from the date the surcharge became due and payable (for a credit amendment) where the Commissioner does not form the opinion that fraud or evasion is present.
6.12 The new provisions also ensure a further amendment can only be made within 4 years in respect of a particular that has previously been amended. No further amendments are permitted after this time. [Item 16 of Schedule 1, Item 10 of Schedule 2 and Item 4 of Schedule 3] .
6.13 New sections 17A and 15A respectively of the Assessment and Collection Acts and new section 11A of the TP(A & C) Act also limit the time for amendments made under sections 19 and 20 of the SCT(A & C) Act, section 17 of the CP(A & C) Act and section 12 of the TP(A & C) Act, but do not limit the time for amendment to an assessment calculated at the highest rate because the member did not quote a tax file number. [Items21 and 24 of Schedule 1, Item 12 of Schedule 2 and Item 5 of Schedule 3] .
6.14 Transitional provisions apply to ensure the 4 year amendment period does not prevent amendments to give effect to changes made by this Bill. [Item 45 of Schedule 1 and Item 28 of Schedule 2] .
6.15 New subsections 24(1) and 20(1) respectively of the Assessment and Collection Acts enable a member to object to an assessment. New subsection 24(1) of the SCT(A & C) Act also enables a superannuation provider to object in its own right, without a member being dissatisfied. [Item 25 of Schedule 1 and Item 13 of Schedule 2]
6.16 New subsection 24(2) of the SCT(A & C) Act enables a provider to object for a class of members or against a class of assessments. If a provider is not satisfied with the decision on the objection, the provider may appeal. Any relevant appeal fee will be calculated on the basis of a single dispute.
6.17 A new definition for class is included at sections 43 and 38 respectively of the Assessment and Collection Acts. [Item 30 of Schedule1 and Item 17 of Schedule 2]
6.18 If a member wishes to challenge the most recently reported surchargeable contributions, the member must first contact the superannuation provider. If the matter cannot be resolved between the provider and the member, the matter may be taken to the Superannuation Complaints Tribunal.
6.19 The Commissioner will consider surcharge objections using the members taxable income as last assessed and surchargeable contributions as last reported.
6.20 The surcharge legislation will continue to apply Part IVC of the Taxation Administration Act 1953 to set out the process and relevant time frames for surcharge objections and for further appeal proceedings. [Item25 of Schedule 1, Item 13 of Schedule 2 and Item1 of Schedule 3]
6.21 Transitional provisions allow members and providers more time in which to object to assessments issued before the date of Royal Assent to the Act. [Item 44 of Schedule 1 and Item 27 of Schedule 2]