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Superannuation Contributions Tax (Members of Constitutionally Protected Superannuation Funds) Assessment and Collection Bill 1997

Superannuation Contributions Tax (Members of Constitutionally Protected Superannuation Funds) Imposition Bill 1997

Superannuation Contributions Tax (Members of Constitutionally Protected Superannuation Funds) Imposition Act 1997

Superannuation Contributions and Termination Payments Taxes Legislation Amendment Bill 1997

Superannuation Contributions Tax Imposition Amendment Bill 1997

Termination Payments Tax Imposition Amendment Bill 1997

Explanatory Memorandum

(Circulated by authority of the Treasurer, the Hon Peter Costello, MP)

General outline and financial impact

These Bills form part of a package of legislation designed to give a legislative framework for the introduction of a superannuation contributions surcharge for high income earners.

The Superannuation Contributions Tax (Members of Constitutionally Protected Superannuation Funds) Assessment and Collection Bill 1997 provides for the assessment and collection of the surcharge from members of constitutionally protected superannuation funds. The provisions of this Bill are explained in Part 1 - Chapters 1 to 7 of the Explanatory Memorandum.

The Superannuation Contributions Tax (Members of Constitutionally Protected Superannuation Funds) Imposition Bill 1997 imposes the superannuation contributions surcharge on members of constitutionally protected superannuation funds. The provisions of this Bill are explained in Part 2 - Chapter 8 of the Explanatory Memorandum.

The Superannuation Contributions and Termination Payments Taxes Legislation Amendment Bill 1997 makes consequential amendments to a number of Acts as a result of the introduction of the two new Bills dealing with the application of the surcharge to members of constitutionally protected superannuation funds. The Bill also makes technical amendments to clarify the operation of the surcharge. The provisions of this Bill are explained in Part 3 - Chapters 9 to 18 of the Explanatory Memorandum.

The Superannuation Contributions Tax Imposition Amendment Bill 1997 amends the Superannuation Contributions Tax Imposition Act 1997 to round the rate of superannuation contributions surcharge imposed under that Act to 5 decimal places. This Bill also makes technical amendments to the provisions in that Act concerning the actions the Commissioner must take where a member has not provided his or her tax file number. The provisions of this Bill are explained in Part 4 - Chapter 19 of the Explanatory Memorandum.

The Termination Payments Tax Imposition Amendment Bill 1997 amends the Termination Payments Tax Imposition Act 1997 to round the rate of termination payments surcharge imposed under that Act to 5 decimal places. The provisions of this Bill are explained in Part 5 - Chapter 20 of the Explanatory Memorandum.

Date of effect: The Superannuation Contributions Tax (Members of Constitutionally Protected Superannuation Funds) Assessment and Collection Bill 1997 and the Superannuation Contributions Tax (Members of Constitutionally Protected Superannuation Funds) Imposition Bill 1997 have effect from 20 August 1996.

The amendments contained in Schedules 3, 5 and 9, together with the amendments in Items 1 and 2 and 4 to 45 of Schedule 4 of the Superannuation Contributions and Termination Payments Taxes Legislation Amendment Bill 1997 have effect from 5 June 1997. The remaining amendments in this Bill commence from the day on which the Act receives the Royal Assent.

The Superannuation Contributions Tax Imposition Amendment Bill 1997 and the Termination Payments Tax Imposition Amendment Bill 1997 have effect from 5 June 1997.

Proposal announced: The introduction of the superannuation contributions surcharge for high income earners was announced by the Government in the 1996-97 Budget and was incorporated in the Treasurer's Press Release No 87 of 20 August 1996 entitled 'Superannuation Reform'. The application to constitutionally protected schemes was further announced in the Treasurer's Press Release No 5 of 5 February 1997 entitled 'Superannuation contributions surcharge for higher income individuals: application to defined benefits schemes, unfunded schemes and golden handshakes'.

Financial impact: It is estimated that the revenue impact of the surcharge will be $480 million in 1997-98, $470 million in 1998-99 and $530 million in 1999-2000.

Compliance cost impact: Full details of the compliance costs associated with the surcharge measures are contained in the compliance cost statement in the Explanatory Memorandum to the Superannuation Contributions Tax (Assessment and Collection) Act 1997.

PART 1 - Superannuation Contributions Tax (Members of Constitutionally Protected Superannuation Funds) Assessment and Collection Bill 1997

Part 1 of the Explanatory Memorandum (Chapters 1 to 7) explains the provisions of the Superannuation Contributions Tax (Members of Constitutionally Protected Superannuation Funds) Assessment and Collection Bill 1997.

Chapter 1 - Preliminary

Overview

1.1 Part 1 of the Bill sets out the preliminary details of the Act.

Purpose of the provisions

1.2 The purpose of the Part is to:

·
establish the title, scope and commencement date of the Act; and
·
provide an outline of the purpose and operation of the Act.

Explanation of the provisions

Title and Commencement of the Act

1.3 When the Bill is enacted it will be called the Superannuation Contributions Tax (Members of Constitutionally Protected Superannuation Funds) Assessment and Collection Act 1997. [Clause 1]

1.4 The Act will commence on the day it receives the Royal Assent. [Clause 2]

Scope of the Act

1.5 The Act will bind the Crown in the right of the Commonwealth, each of the States, the Australian Capital Territory, the Northern Territory and Norfolk Island. The Act will extend to Norfolk Island, the Territory of Cocos (Keeling) Island and the Territory of Christmas Island. The Crown will not be able to be prosecuted for any offences under this Act. [Clauses 3 and 4]

Object of the Act

1.6 The object of the Act is to provide for the assessment and collection of the superannuation contributions surcharge payable on the surchargeable superannuation contributions of members of constitutionally protected funds who are high income earners. [Clause 5]

Outline of the Act

1.7 Clause 6 highlights significant features of the operation of the Act.

Exclusion of certain persons

1.8 The Act will not apply to a person who is a judge of a court of a State at the commencement of the Act. This includes a person who was a judge of a State at 20 August 1996 but who is no longer a judge when the Act receives the Royal Assent in respect of his or her membership of a constitutionally protected superannuation fund because he or she was a judge. [Clause 7]

Chapter 2 - Liability to surcharge

Overview

2.1 This chapter explains when liability to the surcharge will arise in respect of contributions to constitutionally protected superannuation funds and who bears the liability. The provisions discussed in this chapter are contained in Part 2 of the Bill.

Purpose of the provisions

2.2 The purpose of the provisions is to:

·
identify the amounts which will be subject to the surcharge;
·
explain when the surchargeis payable;
·
identify who will be liable to pay the surcharge; and
·
outline transitional arrangements that affect the amount subject to the surcharge.

Explanation of the provisions

What amounts will surcharge be paid on?

2.3 The surcharge will be imposed on a member's surchargeable contributions for the year beginning 1 July 1996 and later years. [Subclause 8(1)]

2.4 Clause 9 willdetermine the amount of a member's surchargeable contributions for a financial year. The method of calculation of the amount will depend on whether a member belongs to an accumulated benefits scheme or a defined benefits scheme.

2.5 This Bill will only apply if the superannuation provider who runs the schemeis a trustee of a superannuation fund or scheme declared by the Income Tax Regulations to be a constitutionally protected fund. These are certain State superannuation funds or schemes which are listed in Regulation 177 and Schedule 14 of the Income Tax Regulations. [Clause 37 - definitions of 'constitutionally protected superannuation fund' and 'superannuation provider']

Members of accumulated benefits schemes

2.6 A 'superannuation (accumulated benefits) provider' is a superannuation provider that is not a superannuation (defined benefits) provider. Generally, an accumulated benefits provider is the provider of an accumulation fund or a defined contribution fund. An accumulation fund or a defined contribution fund is a fund where the benefit a member receives is the total of contributions made plus net earnings on those contributions.

2.7 If contributions are paid by or for a member during the financial year to a superannuation (accumulated benefits) provider of a fund that is a complying superannuation fund, or if there is an allocated surplus amount in relation to a member for a financial year, the member's surchargeable contributions for the financial year will be the sum of:

·
amounts that, if the fund were not a constitutionally protected superannuation fund, would be taxable contributions under:

·
subparagraph 274(1)(a)(i) of the Income Tax Assessment Act 1936 - that is, contributions made to a complying superannuation fund by an employer or by another person who is not the member;
·
subparagraph 274(1)(b)(ii) of the Income Tax Assessment Act - that is, a superannuation guarantee shortfall component paid by the Commissioner to a complying superannuation fund; or
·
paragraph 274(1)(e) of the Income Tax Assessment Act - that is, amounts paid by the Commissioner to a complying superannuation fund from the Superannuation Holding Accounts Reserve; and

·
personal contributions that are allowed as a deduction to the member under section 82AAT of the Income Tax Assessment Act. A member is entitled to a deduction under section 82AAT if:

·
the member does not receive any employer superannuation support; or
·
the member does receive employer superannuation support but his or her income from the employer who provides that support is less than 10% of his or her total assessable income; and
·
specified roll-over amounts that are the roll-over of an amount that is an eligible termination payment (ETP) under paragraph (a) of the definition of ETP in subsection 27A(1) of the Income Tax Assessment Act. Generally, a paragraph (a) ETP is a lump sum payment received from an employer on termination of employment. A specified roll-over amount is the untaxed element of the post-June 1983 component of the ETP that is rolled-over to a superannuation provider; and
·
allocated surplus amounts (see paragraph 2.8).

Subclause 9(2)]

2.8 An 'allocated surplus amount' is any amount allocated by a superannuation (accumulated benefits) provider for the benefit of a member of a superannuation fund for the financial year that exceeds an amount that, in the opinion of an eligible actuary according to Australian actuarial practice, is reasonable having regard to:

·
the amounts paid by or for the member to the provider; and
·
the fund's investment earnings relating to the member's interest in the fund; and
·
any other relevant matters.

2.9 An allocation would be reasonable if, for example, it represents an ordinary return on the investment. An amount allocated from fund surplus which substantially increased a member's benefit, for example, would be an unreasonable allocation that is an allocated surplus amount.

Clause 37 - definition of allocated surplus amount]

Members of defined benefits schemes

2.10 A 'superannuation (defined benefits) provider' is a superannuation (funded defined benefits) provider or a superannuation (unfunded defined benefits) provider. Generally, a superannuation (defined benefits) provider will be the provider of a fund or scheme with defined benefit members. A 'defined benefit member' is a member who is entitled to a benefit based on:

·
the amount of the member's salary at a particular date or the average of the member's salary over a period; and/or
·
an amount stated in the constituent document for the superannuation fund or scheme.

[Clause 37 - definitions of 'superannuation (defined benefits) provider' and 'defined benefit member']

2.11 For members of defined benefits superannuation schemes the member's surchargeable contributions for a financial year will be the amount worked out using the following formula:

Member's superannuation salary X Notional surchargeable contributions factor

where:

·
member's superannuation salary is the annual salary used by the fund or scheme to calculate the amount of contributions and/or the amount of benefits payable; and
·
the 'notional surchargeable contributions factor' (NSCF) is the factor applying to the member for that year certified by an eligible actuary according to Australian actuarial practice. A method for determining the NSCF, which is acceptable to the Commissioner, is contained in Superannuation Contributions Ruling SCR 97/1. [Clause 37 - definition of 'notional surchargeable contributions factor']

[Subclause 9(3)]

Transitional arrangements for the 1996-97 financial year

2.12 For the 1996-97 financial year surchargeable contributions will be only those amounts that:

·
if the member is a member of an accumulation scheme - are contributions paid to or surplus amounts allocated by a superannuation (accumulated benefits) provider after 7.30 pm by legal time in the Australian Capital Territory on 20 August 1996 (Budget night); or
·
if the member is a member of a defined benefits superannuation scheme - are the part of the member's surchargeable contributions which are certified by an eligible actuary to relate to the part of the financial year that started immediately after 7.30 pm by legal time in the Australian Capital Territory on 20 August 1996 (Budget night).

[Subclause 9(4)]

When is surcharge payable?

2.13 Surcharge is payable only if a member's adjusted taxable income exceeds the surcharge threshold . [Subclause 8(2)]

2.14 A member's 'adjusted taxable income' for a financial year is the sum of:

·
the member's taxable income of the year of income, less any amount included in assessable income because;

·
the amount is an ETP paid from a superannuation fund, retirement savings account, approved deposit fund, life insurance company or registered organisation; or
·
the amount is a lump sum payment for unused annual leave or unused long service leave paid to the member on the termination of his or her employment because of redundancy or invalidity; and

·
the member's surchargeable contributions for that financial year.

2.15 The member's taxable income is the member's taxable income as assessed under the Income Tax Assessment Act.

Clause 37 - definition of 'adjusted taxable income' and 'taxable income']

2.16 The 'surcharge threshold' for the 1996-97 financial year is $70,000. [Subclause 10(1)]

2.17 The surcharge threshold is indexed in subsequent financial years by movements in full-time adult average weekly ordinary time earnings. This will ensure that the surcharge threshold amount will increase in line with movements in salary and wages and will retain its real value over time. [Subclauses 10(2) to (7)]

Examples

2.18 David has taxable income for the 1996-97 financial year of $40,000 and surchargeable contributions made by his employer (after 20 August 1996) of $20,000. David's adjusted taxable income is $60,000. David would not be liable to surcharge because his adjusted taxable income was below $70,000.

2.19 Chloe has taxable income for the 1996-97 financial year of $65,000 and surchargeable contributions made by her employer (after 20 August 1996) of $25,000. Chloe's adjusted taxable income is $90,000. Chloe would be liable to surcharge because her adjusted taxable income was more than $70,000.

Who is liable to pay the surcharge?

2.20 Clause 11 provides that the superannuation contributions surcharge on a member's surchargeable contributions to a constitutionally protected superannuation fund is payable by the member.

Who is exempt from the surcharge?

2.21 Surcharge is not payable by genuine residents of Norfolk Island as identified in Division 1A of Part III of the Income Tax Assessment Act. Genuine residents of Norfolk Island are exempt from income tax. It is consistent to also exempt them from the surcharge. [Subclause 8(3)]

2.22 00A member of a constitutionally protected superannuation fund who is a judge of a court of a State at the commencement of the Act is also exempt from the surcharge. This includes a person who was a judge of a State at 20 August 1996 but who is no longer a judge when the Act receives the Royal Assent in respect of his or her membership of a constitutionally protected superannuation fund because he or she was a judge. [Clause 7]

Chapter 3 - Assessment and collection of surcharge

Overview

3.1 Part 3 of the Bill deals with the assessment and collection of the surcharge.

Purpose of the provisions

3.2 The purpose of the provisions is to:

·
explain what information must be given by constitutionally protected funds to the Commissioner, to other superannuation providers and to members;
·
allow the Commissioner to determine the form in which information must be provided;
·
establish how and when assessments of the surcharge are to be made;
·
establish a system for deferral of payments of surcharge for members of constitutionally protected funds;
·
outline the conditions under which new or amended assessments of the surcharge may be made and when interest will be payable;
·
provide for the use of tax file numbers in relation to this Act; and
·
allow for objections against assessments of surcharge.

Explanation of the provisions

Superannuation providers must give certain information to the Commissioner

When provider is the holder of contributions at end of financial year

3.3 If, at the end of a financial year, a superannuation provider is the holder of any surchargeable contributions for a member, the superannuation provider must give the following information to the Commissioner:

·
the member's name;
·
the member's home, business or work address;
·
the member's date of birth;
·
the member's tax file number, if the provider has been given it in connection with the operation of this Act;
·
details of contributed amounts held by the provider for the member (see paragraphs 3.8 - 3.9); and
·
any other information required by regulations.

Subclause 12(2)]

When provider has paid out contributions to the member

3.4 Where a superannuation provider pays out an ETP (which will include any surchargeable contributions made by or for the member for the financial year) to the member before the end of the financial year, the superannuation provider must give the Commissioner the following information:

·
the member's name;
·
the member's home, business or work address;
·
the member's date of birth;
·
the member's tax file number, if the provider has been given it in connection with the operation of this Act;
·
details of contributed amounts that were held by the provider for the member when the benefit was paid out (see paragraphs 3.8 - 3.9);
·
the date on which the payment was made to the member; and
·
any other information required by the regulations.

Subclause 12(3)]

3.5 If an ETP is received by a member of a constitutionally protected superannuation fund and rolled-over to another superannuation fund, the ETP is taken to have been paid out to the member and the superannuation provider must give a section 12 statement to the Commissioner.

Date by which information must be given

3.6 Statements under subsection 12(2) and subsection 12(3) must be given to the Commissioner by the notification date(or such further time as the Commissioner allows). For the 1996-97 financial year the notification date is 15 December 1997. For all subsequent financial years it is 31 October following the financial year. [Clause 37 - definition of 'notification date']

Copy of statement to be given to member

3.7 A superannuation provider who gives a statement to the Commissioner under subsection 12(2) or subsection 12(3) is required to advise the member of the details of surchargeable contributions shown on the statement no later than 12 months after the statement is given. This advice can be included on the annual statement required under the Superannuation Industry (Supervision) Act 1993 and may be given to the member prior to being sent to the Commissioner. [Subclause 12(4)]

Contributed amounts

3.8 If the provider is a superannuation (accumulated benefit) provider, the provider is required to give the Commissioner details of the total of contributed amounts in respect of the member, and:

·
the total of those amounts that, if the fund were not a constitutionally protected superannuation fund, would be taxable contributions under:

·
subparagraph 274(1)(a)(i) of the Income Tax Assessment Act - that is, contributions made to a complying superannuation fund by an employer or by another person who is not the member;
·
subparagraph 274(1)(b)(ii) of the Income Tax Assessment Act - that is, a superannuation guarantee shortfall component paid by the Commissioner to a complying superannuation fund;
·
paragraph 274(1)(e) of the Income Tax Assessment Act - that is, amounts paid by the Commissioner to a complying superannuation fund from the Superannuation Holding Accounts Reserve; and

·
the total of specified roll-over amounts that are the roll-over of an amount that is an ETP under paragraph (a) of the definition of ETP in subsection 27A(1) of the Income Tax Assessment Act; and
·
the total of any allocated surplus amounts.

Paragraph 12(5)(a)]

3.9 If the provider is a superannuation (defined benefits) provider, the provider is required to give the Commissioner details of the total amount of surchargeable contributions worked out using the formula:

Member's superannuation salary X Notional surchargeable contributions factor

Paragraph 12(5)(b)]

When provider pays out benefits to the member

3.10 When a superannuation provider pays out a lump sum or commences to pay a pension to the member, the provider must advise the Commissioner of the following information:

·
the member's name;
·
the member's home, business or work address;
·
the member's date of birth;
·
the member's tax file number, if the provider has been given it in connection with the operation of this Act;
·
the date on which the lump sum payment was made or the pension commenced to be paid to the member;
·
the amount of the lump sum paid reduced by the member's undeducted contributions and the capital value of the pension reduced by the member's undeducted purchase price; and
·
any other information required by the regulations.

Subclause 12(6)]

3.11 A subclause 12(6) statement must be given to the Commissioner before:

·
if the superannuation provider is informed by the member on or before the 10th day of the month after the month ('payment month') in which the benefit was paid or commenced to be paid, that:

·
the member had applied to the Commissioner for the issue of a tax file number; and
·
the Commissioner had neither granted nor refused that application;

the end of the 14th day of the second month after the payment month; or
·
in any other case - the end of the 14th day of the month after the payment month.

3.12 The Commissioner will have a discretion to extend the time by which the statement must be given.

3.13 This is the same time frame that is required for reasonable benefit limit purposes (see paragraph 140M(3)(b) of the Income Tax Assessment Act).

Subclause 12(7)]

Form the information must be given in

3.14 The Commissioner may set out the way in which information is to be given by publishing a notice in the Gazette. This flexibility will enable the Commissioner to ensure the most efficient reporting systems are adopted in response to technological change. [Subclause 13(1)]

Information held in electronic form

3.15 Specifically, the Commissioner may set out the way in which information that is kept by means of a data processing device by a superannuation provider is to be provided to the Commissioner. This will facilitate the effective use of electronic commerce between superannuation providers and the Commissioner. It is envisaged that the use of electronic commerce will reduce compliance costs for superannuation providers. [Subclause 13(3)]

Exemptions

3.16 The Commissioner may chose to exempt a superannuation provider from the requirements set out in a notice relating to the giving of information in electronic form. [Subclause 13(4)] Such an exemption is a disallowable instrument for the purposes of section 46A of the Acts Interpretation Act 1901. [Subclause 13(5)]

Assessment of liability to pay surcharge

3.17 For each year in which a member has surchargeable contributions, the Commissioner must:

·
calculate a member's adjusted taxable income;
·
if the adjusted taxable income is more than the surcharge threshold:

·
calculate the surchargeable contributions;
·
calculate the rate of surcharge that applies to the member; and
·
make an assessment of the surcharge payable.

Subclause 14(1)]

3.18 The assessment must set out the member's adjusted taxable income for the financial year, the amount of surchargeable contributions and amount of surcharge payable. [Subclause 14(2)] When the Commissioner has made the assessment, the Commissioner must give it to the member. [Subclause 14(3)]

3.19 If the Commissioner calculates that no surcharge is payable by a member for a financial year, the calculation will be taken to be an assessment of a nil amount of surcharge (but the Commissioner is not required to give a notice in respect of such an assessment). [Subclause 14(4)]

When is surcharge payable?

3.20 Although a member of a constitutionally protected fund will receive an assessment each year in respect of the surcharge, actual payment will be deferred until the member is entitled to receive a lump sum or pension or annuity from the fund. [Subclause 15(1)]

3.21 The Commissioner must maintain a surcharge debt account for each member of a constitutionally protected superannuation fund. [Subclause 15(2)]

3.22 The Commissioner must debit the member's surcharge debt account by the amount of surcharge assessed in respect of the member. [Subclause 15(3)]

3.23 If a member's surcharge debt account is in debit at the end of a financial year, the Commissioner must debit the account by an amount of interest on the debt. The interest is intended to offset any advantage which might otherwise be gained by deferring payment of the surcharge. [Subclause 15(4)]

3.24 The rate of interest will be the 10 year Treasury bond rate. If 10 year Treasury bonds are issued on the last day of the financial year, the rate will be the annual yield on the bonds. Otherwise, the rate will be the published yield on 10 year bonds for the last day of the financial year. [Subclause 15(5)]

3.25 When the Commissioner has received a notice from the superannuation provider that a lump sum has been paid or a pension or annuity has commenced to be paid to a member whose surcharge debt account is in debit, the member is liable to pay the lesser of:

·
the amount by which the surcharge debt account is in debit; or
·
15% of the amount remaining after reducing the lump sum paid by the member's undeducted contributions and 15% of the amount remaining after reducing the capitalised value of the pension or annuity by the member's undeducted purchase price.

Subclause 15(6)]

3.26 The Commissioner must notify the member of the amount of surcharge payable. [Subclause 15(7)] The member must pay the amount of surcharge to the Commissioner within three months from the date of the notice or within such further time as the Commissioner allows. Payment of the amount will cause the surcharge debt account to be reduced to nil. [Subclause 15(8)]

Voluntary payments

3.27 Once an assessment has been made, a member can make early payments on a voluntary basis to be applied against the debit in the surcharge debt account. [Subclause 15(9)] If the member makes an early payment, the Commissioner must issue an acknowledgment to the member. The Commissioner must then credit the surcharge debt account with the amount of the payment and advise the member of the new balance of the account. [Subclause 15(10)]

Amended assessments

Assessment amended because tax file number (TFN) became available

3.28 If a member does not quote his or her TFN before an assessment is made, and the Commissioner is not able to find it out by other means, the member may be assessed to pay surcharge at a rate of 15%.

3.29 If a member subsequently quotes his or her TFN for surcharge purposes, or the Commissioner is otherwise able to find it out, the Commissioner must amend the assessment where the amount originally assessed was more than it would have been if the member had quoted the TFN.

3.30 The amendment will reduce the amount of surcharge to the amount that would have been payable if the member had quoted his or her TFN before the original assessment was made.

Clause 16]

Assessment amended on other grounds

3.31 The Commissioner will also have the power to amend assessments where there is a change in a member's adjusted taxable income or surchargeable contributions, or where the Commissioner is permitted under another provision of this Act to amend an assessment. In addition, the Commissioner will be able to amend an assessment where the rate of surcharge in the original assessment was nil, and afterwards the rate was found to be greater than nil. [Subclauses 17(1), 17(2) and 17(3)]

3.32 If the effect of the amendment is to increase a member's surcharge liability and the deferred surcharge amount has not yet become payable by the member, then the Commissioner will be required to debit the member's surcharge debt account for the amount of the increase. [Paragraph 17(4)(a)]

3.33 If the effect of the amendment is to increase a member's surcharge liability and the deferred surcharge amount has become payable by the member, then the amount of the increase is payable by the member within three months from the date of the amended assessment or within such further time as the Commissioner allows. [Paragraph 17(4)(b)]

3.34 If the effect of the amendment is to reduce a member's surcharge liability and the deferred surcharge amount has not yet become payable by the member, then the Commissioner will be required to credit the member's surcharge debt account for the amount of the reduction. [Paragraph 17(5)(a)]

3.35 If the effect of the amendment is to reduce a member's surcharge liability and the deferred surcharge amount has become payable by the member, then the amount of the reduction will be applied against any other surcharge liability of the member under this Act and any remaining amount will be refunded to the member. [Paragraph 17(5)(b)]

Payment of interest if surcharge increased

3.36 If an amended assessment increases liability to the surcharge, the member will be liable to pay interest to the Commonwealth on the amount of the increase. [Subclause 18(1)] Similarly, if the Commissioner previously calculated that a member was not liable to surcharge for a financial year, and later assessed the member as being liable, the member will be required to pay interest on the amount of the amended assessment. [Subclause 18(3)]

3.37 Interest will be payable from 15 June of the financial year to which the assessment relates until the date of the amended assessment. The rate will be the rate under section 214A of the Income Tax Assessment Act. This rate is based on the 13 week Treasury Bond rate. [Subclause 18(2)] Interest will not be payable if the amount is less than 50 cents. [Subclause 18(4)]

3.38 The Commissioner must notify the member of the period for which interest is payable and the amount of interest. If the deferred surcharge has not yet become payable by the member, the Commissioner must debit the member's surcharge debt account for the amount of the interest. If the amount representing surcharge has become payable, the member must pay the interest within one month after the day on which he or she was notified of the amount. [Subclause 18(5)]

3.39 The Commissioner will be able to remit any or all of the interest payable under this section. A decision of the Commissioner not to remit interest is reviewable by the Administrative Appeals Tribunal (AAT). [Subclause 18(6)]

Tax file numbers

3.40 For the purposes of this Act, the Commissioner will be able to use a tax file number obtained for any other purpose under a law relating to taxation or superannuation. [Clause 19]

Objections against assessments

3.41 Where a member is dissatisfied with a surcharge assessment in relation to the calculation of adjusted taxable income the member may object to the calculation in the manner set out in Part IVC of the Taxation Administration Act 1953. [Clause 20]

When must the objection be made?

3.42 Under the Taxation Administration Act a taxpayer generally has 60 days from receiving a notice of assessment to object against the assessment. An objection may be lodged after the 60 day period but must be accompanied by a request for an extension of time (section 14ZW of the Taxation Administration Act). The Commissioner must then decide whether to consider the objection as lodged on time. A decision not to extend the lodgement time is reviewable by the AAT (section 14ZX).

How must the objection be made?

3.43 The objection must be in writing, and must fully and in detail state the grounds that the taxpayer is relying upon (section 14ZU). If an amendment is made to an assessment the taxpayer can only object to the alterations (section 14ZV).

How must the Commissioner respond to an objection?

3.44 If an objection is lodged within time, the Commissioner must decide whether to allow in full, allow in part, or disallow the objection (section 14ZY). A person who has lodged an objection may give the Commissioner a notice requiring the Commissioner to make a decision, where the Commissioner has failed to make a decision on the objection by the later of:

·
60 days after the objection was lodged with the Commissioner;
·
60 days after the day on which the Commissioner decides to agree to accept an objection lodged out of time; or
·
if the Commissioner has requested further information relating to the objection - 60 days after the receipt of that information.

3.45 If the Commissioner does not make a decision within 60 days of receiving the notice, the Commissioner is deemed to have disallowed the objection and is required to serve a notice of the objection decision on the person (section 14ZYA).

Review by the AAT or Federal Court

3.46 If the objection is not allowed in full the taxpayer has the option to apply either to the AAT or the Federal Court depending upon the circumstances of the case (section 14ZZ).

3.47 An application to the AAT or Federal Court must be made within 60 days of receiving the notice of the Commissioner's decision. The application must be in writing and set out the grounds for the application (sections 14ZZC and 14ZZN). The applicant is then limited to these grounds of objection, unless the court or tribunal orders otherwise. The applicant also has the burden of proof (sections 14ZZK and 14ZZO).

Will the surcharge still be payable while an objection is being made?

3.48 Despite appeal and review proceedings pending, any amount owing will still be payable as if there was no review or appeal being undertaken (sections 14ZZM and 14ZZR).

Chapter 4 - Recovery of unpaid surcharge

Overview

4.1 Part 4 of the Bill deals with a number of issues relating to the recovery of unpaid surcharge, interest and late payment penalty.

Purpose of the provisions

4.2 The purpose of the provisions in Part 4 of the Bill is to provide for:

·
late payment penalties;
·
recovery of unpaid amounts of surcharge, interest and late payment penalty;
·
application of payments to debts; and
·
review of decisions not to remit late payment penalties and interest.

Explanation of the provisions

Late payment penalty

When will late payment penalty be applied?

4.3 Where an amount of surcharge remains unpaid after the due date, then a late payment penalty will apply. The penalty is an interest charge on the unpaid amount calculated at the rate provided for interest payments by section 214A of the Income Tax Assessment Act. This rate is based on the 13 week Treasury Bond rate.

4.4 The late payment penalty will accrue daily. That is, the late payment interest component will accumulate on all unpaid amounts from the day after the date a payment was due and will apply to all components of the account, including interest components already accrued.

Clause 21]

Commissioner may remit late payment penalty

4.5 The Commissioner may remit the whole or part of a late payment penalty. [Subclause 21(6)]

4.6 A decision by the Commissioner not to remit late payment penalty is reviewable by the AAT [Clause 25] .

Recovery of unpaid amounts

4.7 The following amounts will be recoverable by the Commonwealth as debts due to the Commonwealth:

·
surcharge due and payable;
·
interest due and payable; and
·
late payment penalty due and payable.

Clause 22]

Payment of amounts

4.8 Surcharge, interest and late payment penalty are payable to the Commissioner. [Clause 23]

Application of payments

4.9 If a person who owes two or more debts to the Commonwealth under this Part pays part of the total debt, the Commissioner may apply the payment in partial discharge of the debt and the Commonwealth may recover the balance of the debt. [Clause 24]

Review of certain decisions

What decisions can be reviewed?

4.10 The Commissioner may review the following decisions:

·
a decision not to remit the whole or any part of interest; and
·
a decision not to remit the whole or any part of late payment penalty.

[Subclause 25(1)]

Who may request a review?

4.11 The person liable to the interest or late payment penalty may request the Commissioner to review the decision. [Subclause 25(2)]

When must the request be made?

4.12 The request must be made within 21 days, or within such further period as the Commissioner allows, after receipt of the Commissioner's notice of the decision. [Subclause 25(2)]

How must the request be made?

4.13 The person must set out the reasons why he or she wishes the decision to be reviewed. [Subclause 25(3)]

How must the Commissioner respond to a request?

4.14 The Commissioner must reconsider the decision and either confirm, revoke or vary it. [Subclause 25(4)] Where such reconsideration is not completed by the Commissioner within 21 days, the Commissioner is taken to have confirmed the decision. [Subclause 25(5)] If the Commissioner confirms, revokes or varies the decision within 21 days, the Commissioner must notify the person of the result of the reconsideration and the reasons for it. [Subclause 25(6)]

Review by the AAT

4.15 Where the person is still not satisfied with the decision, he or she may refer the matter to the AAT. [Subclause 25(7)] Application for review must be made within 28 days of the Commissioner's decision, or if the Commissioner fails to make a decision, within 28 days of the day on which the decision was taken to have been confirmed. [Subclause 25(8)] The hearing of a proceeding before the AAT is to take place in private and the Tribunal may give directions in accordance with the Administrative Appeals Tribunal Act 1975. [Subclause 25(10)]

4.16 A request for the Commissioner to reconsider a decision will not affect the operation of the decision or prevent the taking of action to implement the decision. [Subclause 25(9)]

Chapter 5 - Administration

Overview

5.1 Part 5 of the Bill deals with the administration of the Act.

Purpose of the provisions

5.2 Part 5 of the Bill makes provision for:

·
the general administration of the Act;
·
an annual report to be given to Parliament on the operation of the Act; and
·
the protection of information obtained under the Act.

Explanation of the provisions

Administration of the Act

5.3 The Commissioner of Taxation is to be responsible for the general administration of the Act. These responsibilities include assessment of liability to the surcharge, collection of the surcharge, maintaining surcharge debt accumulation accounts for members and ensuring compliance with the provisions of the Act. [Clause 26]

Annual Report

5.4 The Commissioner will be required to provide an annual report on the working of the Act to the Treasurer for presentation to Parliament. [Clause 27]

Secrecy

5.5 The Bill imposes an obligation of secrecy on persons who, in the course of their duties relating to the administration of the Act, acquire information on the affairs of another person. [Clause 28] The secrecy provisions are consistent with those in other Commonwealth Acts administered by the Commissioner.

5.6 The secrecy provisions apply to a person who is or has been:

·
the Commissioner, a Second Commissioner or a Deputy Commissioner; or
·
an officer or employee of the ATO; or
·
otherwise appointed or employed by, or a provider of services for, the Commonwealth.

[Subclause 28(1)]

5.7 A person is not allowed to make a record of, or divulge or communicate protected information about another person except in the course of their duties or if it is necessary to do so for the purpose of giving effect to the provisions of the Act. This obligation extends to divulging or communicating protected information to a Minister or a court. [Subclauses 28(2), (4) and (5)]

5.8 However, the Commissioner, a Second Commissioner or a Deputy Commissioner or a person authorised by them is not prevented from communicating or divulging protected information to a person to enable that person to perform duties for the purposes of an Act (including associated regulations) of which the Commissioner has the general administration. [Subclauses 28(3) and (6)]

5.9 Similarly, nothing in an Act administered by the Commissioner can prohibit the Commissioner, a Second Commissioner, a Deputy Commissioner or a person authorised by them from communicating or divulging any information to a person performing duties under this Act, or to disclose information or comments to a court where it is for the purpose of this Act. [Subclause 28(7)]

5.10 Information will also be able to be divulged to the Insurance and Superannuation Commissioner for the purposes of the administration of the Superannuation Industry (Supervision) Act 1993. [Subclause 28(8)]

5.11 A person must make a written oath or declaration to maintain secrecy in accordance with the secrecy provisions of this Act, if it is required by the Commissioner, a Second Commissioner or a Deputy Commissioner. [Subclause 28(9)]

Penalty

5.12 The penalty for failure to adhere to the secrecy provisions is imprisonment for two years. [Subclause 28(2)]

Chapter 6 - Miscellaneous

Overview

6.1 This chapter deals with a number of miscellaneous provisions contained in Part 6 of the Bill.

Purpose of the provisions

6.2 These provisions set out a number of miscellaneous aspects of the operation of the Act, including:

·
authorised officers;
·
evidence;
·
access to premises;
·
obtaining information and evidence;
·
record keeping requirements;
·
collection of surcharge from third parties;
·
application of the criminal code; and
·
regulations.

Explanation of the provisions

Authorised officers

6.3 The Commissioner may, by writing, authorise a person who is an officer or employee under the Public Service Act 1922 to be an authorised officer for the purposes of Part 6. [Clause 29]

Evidence

6.4 The Bill specifies the evidentiary value of certain documents and copies of documents. This is to ensure that the only avenue of appeal is to dispute the amount of the liability for the superannuation contributions surcharge.

6.5 The documents covered include those issued or given, or purporting to be issued or given, under the hand of the Commissioner, a Second Commissioner or a Deputy Commissioner. The rules applying to such documents are as follows:

·
the production of an assessment or document purporting to be a copy of an assessment is conclusive evidence of the due making of the assessment and that the amounts and all particulars of the assessment are correct, except in proceedings before a tribunal or court; [Subclause 30(1)]
·
the production of a document purporting to be a copy of a document issued or given by the Commissioner, a Second Commissioner or a Deputy Commissioner is prima facie evidence of the original document being issued or given; [Subclause 30(2)]
·
the production of a document purporting to be a copy of, or extract from an assessment is evidence of the matters in the document to the same extent as the original document had it been produced; and [Subclause 30(3)]
·
the production of a signed certificate certifying an amount of superannuation surcharge, interest or late payment penalty payable at the date of the certificate is prima facie evidence of the matter stated in the certificate. [Subclause 30(4)]

Access to premises and obtaining information and evidence

6.6 The Bill contains provisions dealing with access to premises and information gathering powers. Similar provisions are found in other Acts administered by the Commissioner - for example, sections 263 and 264 of the Income Tax Assessment Act. The provisions are necessary for the Commissioner to ensure compliance with the Act. [Clauses 31 and 32]

6.7 The access and information gathering powers may be used, for example, to ensure that a superannuation provider has reported the full amount of surchargeable contributions it has received in a financial year for a member. In such a case, it may be necessary for the Commissioner to inspect documents which may not otherwise be available for inspection if access and information gathering powers were not included in the Bill.

6.8 Under these powers, an authorised officer must be given entry at any reasonable time, to land or premises. The officer must also be given full and free access to all books, records and other documents held by any person. [Subclause 31(3)]

6.9 The officer is not entitled to enter or remain on the land or premises if, upon the request of the occupier, he or she is unable to produce written authority signed by the Commissioner stating that the officer is an authorised officer. [Subclause 31(2)]

6.10 The occupier of land or premises entered or proposed to be entered by an authorised officer is required to provide the officer with all reasonable facilities and assistance to carry out official duties. [Subclauses 31(3) and (4)] For example, an authorised officer will be entitled to reasonable use of work space, facilities to extract relevant information stored on computer, photocopying, telephone, fax, light and power facilities. In addition, the officer will be entitled to reasonable assistance in the form of, for example, advice as to where relevant documents are located and access to areas where such documents are located.

6.11 The maximum penalty on conviction for failure to comply with the access to premises provisions is a fine of 10 penalty units. [Subclause 31(3)]

6.12 The Commissioner will also be able to require, by notice in writing, any person to:

·
give information on oath or otherwise;
·
attend before the Commissioner and answer questions on oath or otherwise; or
·
produce any documents in the custody or under the control of that person.

Clause 32]

6.13 The regulations must prescribe scales of expenses to be allowed to persons required to attend before the Commissioner. [Subclause 32(4)]

Record keeping requirements

6.14 The Bill imposes certain record keeping requirements on superannuation providers. Superannuation providers must keep records of all transactions taken under the Act. [Subclause 33(1)]

6.15 The records must be kept:

·
in writing in the English language or, if not in writing (eg, in an electronic medium such as magnetic tape or computer disc), in a form which is readily accessible and convertible into writing in English; and [Paragraph 33(2)(a)]
·
so that liability under the Act can be readily worked out. [Paragraph 33(2)(b)]

6.16 The records must be retained for 5 years. The 5 year period runs from the day on which the records were prepared or obtained, or from when the transactions or acts to which those records relate were completed, whichever is the later. [Subclause 33(3)]

6.17 A superannuation provider does not have to keep records if the Commissioner notifies the provider the retention of the records is not required. [Subclause 33(4)]

Commissioner may collect money from third parties

6.18 Clause 34 enables the Commissioner to collect funds held for or on behalf of a member in order to meet a surcharge liability.

Application of the Criminal Code

6.19 Chapter 2 of the Criminal Code applies to offences against this Act. [Clause 35]

Regulations

6.20 The Bill provides that the Governor-General may make regulations for the purposes of the Act. The regulations can provide for a penalty not exceeding a fine of five penalty units for offences against the regulations. [Clause 36]

Chapter 7 - Interpretation

Overview

7.1 This chapter outlines definitions of terms contained in Part 7 of the Bill. The definitions are contained in Clause 37 of the Bill. Some of these terms are explained in detail in other Parts of the Bill. In such cases the terms will not be explained in this chapter but a reference will be given to the paragraph where the term is discussed. Definitions which are self explanatory are not specifically discussed.

Explanation of the provisions

7.2 adjusted taxable income - see paragraph 2.14.

7.3 allocated surplus amount is any amount allocated by a superannuation (accumulated benefits) provider for the benefit of a member of a superannuation fund for the financial year that exceeds an amount that, in the opinion of an eligible actuary according to Australian actuarial practice, is reasonable having regard to:

·
the amounts paid by or for the member to the provider; and
·
the fund's investment earnings relating to the member's interest in the fund; and
·
any other relevant matters.

7.4 complying superannuation fund is a superannuation fund that has been given a notice of compliance under section 45 of the Superannuation Industry (Supervision) Act 1993 (the SIS Act).

7.5 constitutionally protected fund has the same meaning as in Part IX of the Income Tax Assessment Act - see paragraph 2.5.

7.6 defined benefit member is a member who is entitled to a benefit based on:

·
the amount of the member's salary at a particular date or the average of the member's salary over a period; and/or
·
an amount stated in the constituent document for the superannuation fund or scheme.

7.7 defined benefits superannuation scheme is:

·
a public sector superannuation scheme that is a regulated superannuation fund or an exempt public sector superannuation scheme that has at least one defined benefit member; or
·
a regulated superannuation fund (other than a public sector superannuation scheme) that has at least one defined benefit member where some or all of the contributions paid into a fund are not allocated to any individual member.

7.8 eligible termination payment (ETP) has the same meaning as in subsection 27A(1) of the Income Tax Assessment Act. Generally an ETP is a lump sum payment received from an employer upon termination of employment or a lump sum payment from a superannuation fund, retirement savings account or roll-over fund.

7.9 exempt public sector superannuation scheme has the same meaning as in as in section 10 of the SIS Act.

7.10 funded defined benefits superannuation scheme is a defined benefits superannuation scheme that is not an unfunded defined benefits superannuation scheme.

7.11 member means a member of a constitutionally protected superannuation fund.

7.12 notification date is:

·
for the 1996-97 financial year - 15 December 1997;
·
for all subsequent financial years - 31 October following the year of income. For example, for the 1997-98 financial year the notification date is 31 October 1998.

7.13 notional surchargeable contributions factor (NSCF) is, in relation to a superannuation (defined benefits) provider for a member during the financial year, the factor applying to the member for that year certified by an eligible actuary according to Australian actuarial practice. A method for determining the NSCF, which is acceptable to the Commissioner, is contained in Superannuation Contributions Ruling SCR 97/1.

7.14 public sector superannuation scheme is a superannuation scheme established:

·
by or under a law of a State; or
·
under the authority of a State Government or a municipal corporation, another local governing body or a public authority constituted by a law of a State.

7.15 regulated superannuation fund has the same meaning as in the SIS Act. A fund is a regulated superannuation fund if it meets the conditions in section 19 of the SIS Act.

7.16 specified roll-over amount has the same meaning as in subsection 110(1), subsection 116E(1) and subsection 267(1) of the Income Tax Assessment Act. That is, a specified roll-over amount is the untaxed element of the post-June 1983 component of an ETP that is rolled-over to a superannuation provider.

7.17 superannuation (accumulated benefits) provider is a superannuation provider that is not a superannuation (defined benefits) provider.

7.18 superannuation (defined benefits) provider is a superannuation (funded defined benefits) provider or a superannuation (unfunded defined benefits) provider. That is, a superannuation provider who provides defined benefits to its members.

7.19 superannuation fund means a public sector superannuation scheme.

7.20 superannuation (funded defined benefits) provider is a superannuation provider that is the trustee of a constitutionally protected superannuation fund established for the purposes of a funded defined benefits superannuation scheme.

7.21 superannuation provider means a trustee of a constitutionally protected superannuation fund.

7.22 superannuation (unfunded defined benefits) provider is a superannuation provider that is the trustee of a constitutionally protected superannuation fund established for the purposes of an unfunded defined benefits superannuation scheme.

7.23 taxable income is the member's taxable income as assessed under the Income Tax Assessment Act. That is, taxable income is the member's assessable income reduced by allowable deductions as reported by the member on his or her tax return for a year.

7.24 trustee of a superannuation fund means a trustee within the ordinary meaning of the term or the person who manages the fund.

7.25 unfunded defined benefits superannuation scheme is a defined benefits superannuation scheme for which there is no fund established for the purposes of the scheme or where some or all of the contributions to fund benefits are not made to the fund until the member becomes entitled to receive their benefits. That is, the scheme is not funded to pay benefits until the member's benefit entitlement is due to be paid.

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

Overview

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]

Interpretation

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]

Imposition of surcharge

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.

Rate of surcharge

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:

·
has not, after taking all reasonable steps, found out the member's TFN; and
·
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.

then

·
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;
·
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.
·
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]

Part 3

PART 3 - Superannuation Contributions and Termination Payments Taxes Legislation Amendment Bill 1997

Part 3 of the Explanatory Memorandum (Chapters 9 to 18) explains the provisions of the Superannuation Contributions and Termination Payments Taxes Legislation Amendment Bill 1997.

Chapter 9 - Preliminary

Overview

9.1 This Bill makes consequential amendments to nine Acts as a result of the introduction of the Superannuation Contributions Tax (Members of Constitutionally Protected Superannuation Funds) Assessment and Collection Bill 1997 and the Superannuation Contributions Tax (Members of Constitutionally Protected Superannuation Funds) Imposition Bill 1997. The Bill also makes amendments to clarify the operation of the surcharge Acts and to make some technical corrections.

9.2 The Bill is structured in nine schedules, each dealing with amendments to a particular Act.

Summary of the amendments

Purpose of the amendments

9.3 The amendments propose to amend:

·
the Income Tax Assessment Act 1936;
·
the Income Tax Assessment Act 1997;
·
the Superannuation Contributions Tax (Application to the Commonwealth) Act 1997;
·
the Superannuation Contributions Tax (Assessment and Collection) Act 1997;
·
the Superannuation Contributions Tax (Consequential Amendments) Act 1997;
·
the Superannuation Industry (Supervision) Act 1993;
·
the Superannuation (Resolution of Complaints) Act 1993;
·
the Taxation (Interest on Overpayments and Early Payments) Act 1983; and
·
the Termination Payments Tax (Assessment and Collection) Act 1997.

9.4 The amendments to those Acts are contained in the Schedules to the Bill.

Clause 3]

Title and commencement of the Act

9.5 When the Bill is enacted it will be called the Superannuation Contributions and Termination Payments Taxes Legislation Amendment Act 1997. [Clause 1]

9.6 The amendments contained in Schedules 3, 5 and 9, together with the amendments in Items 1 and 2 and 4 to 45 of Schedule 4, are taken to have commenced on 5 June 1997, immediately after the commencement of the Superannuation Contributions Tax (Application to the Commonwealth) Act 1997, the Superannuation Contributions Tax (Assessment and Collection) Act 1997, the Superannuation Contributions Tax (Consequential Amendments) Act 1997 and the Termination Payments Tax (Assessment and Collection) Act 1997. All other amendments commence from the day on which the Act receives the Royal Assent. [Clause 2]

Chapter 10 - Amendments to the Income Tax Assessment Act 1936

10.1 Schedule 1 of the Bill amends the Income Tax Assessment Act 1936 (the 1936 Act).

Eligible termination payments

10.2 An 'eligible termination payment' is defined in subsection 27A(1) of the 1936 Act to include, among other things, any payments received from a complying superannuation fund. The definition of 'eligible termination payment' is being amended to exclude an amount received from the commutation of a pension from a constitutionally protected superannuation fund solely to pay a superannuation contributions surcharge (as defined in section 39 of the Superannuation Contributions Tax (Members of Constitutionally Protected Superannuation Funds) Assessment and Collection Act 1997). The amendment ensures that such an amount is not included in the assessable income of the member under the 1936 Act. [Item 1]

Tax file numbers

10.3 Section 202, section 202DH and section 202DJ of the 1936 Act are concerned with the use of tax file numbers. Paragraph 202(l) and section 202DH are amended to insert references to the Superannuation Contributions Tax (Members of Constitutionally Protected Superannuation Funds) Assessment and Collection Act 1997. [Item 2]

10.4 Section 202DJ is redrafted to ensure that, where a person has quoted his or her tax file number (TFN) to a superannuation provider for the purpose of calculating the tax to be deducted from an eligible termination payment (ETP), that TFN will be taken to have also been quoted for the purposes of the Superannuation Contributions Tax (Members of Constitutionally Protected Superannuation Funds) Assessment and Collection Act 1997. [Item 3]

10.5 A constitutionally protected superannuation fund has the same meaning as in Part IX of the 1936 Act and in the Superannuation Contributions Tax (Members of Constitutionally Protected Superannuation Funds) Assessment and Collection Act 1997. [Item 4]

Interest rates

10.6 Section 214A of the 1936 Act determines the method for working out interest rates for income tax and surcharge purposes. Paragraph 214A(2)(f) is amended to include a reference to section 19 of the Superannuation Contributions Tax (Members of Constitutionally Protected Superannuation Funds) Assessment and Collection Act 1997. This amendment will allow the rate of interest calculated under that Act to be determined by section 214A of the 1936 Act. [Item 5]

Chapter 11 - Amendments to the Income Tax Assessment Act 1997

11.1 Schedule 2 of the Bill amends the Income Tax Assessment Act 1997 (the 1997 Act).

11.2 The amendments ensure that the payment of superannuation contributions surcharge under the Superannuation Contributions Tax (Assessment and Collection) Act 1997 or the Superannuation Contributions Tax (Members of Constitutionally Protected Superannuation Funds) Assessment and Collection Act 1997 and the payment of termination payments surcharge under the Termination Payments Tax (Assessment and Collection) Act 1997 will not be an allowable deduction under the 1997 Act. [Items 1 and 2]

Chapter 12 - Amendments to the Superannuation Contributions Tax (Application to the Commonwealth) Act

12.1 Schedule 3 of the Bill amends the Superannuation Contributions Tax (Application to the Commonwealth) Act 1997.

12.2 The amendment is of a technical nature to remove any doubt that the Superannuation Contributions Tax (Assessment and Collection) Act 1997 applies to superannuation funds administered by the Commonwealth. [Items 1 and 2]

Chapter 13 - Amendments to the Superannuation Contributions Tax (Assessment and Collection) Act

13.1 Schedule 4 of the Bill amends the Superannuation Contributions Tax (Assessment and Collection) Act 1997 (the Act).

Outline of the Act

13.2 Section 6 of the Act outlines significant features of the operation of the Act. The seventh dot point in section 6 is amended to clarify that, for an unfunded defined benefits scheme, the surcharge is not payable until the benefits become payable. [Item 1]

13.3 The ninth dot point of section 6 is omitted to reflect changes to the operation of the Act arising from amendments made to the Act by the Parliament. [Item 2]

Liability to surcharge and advance instalments

13.4 Section 7 of the Act outlines the circumstances in which the superannuation contributions surcharge is payable. New subsection 7(4) provides that no surcharge is payable under the Act where the surcharge is payable under the Superannuation Contributions Tax (Members of Constitutionally Protected Superannuation Funds) Assessment and Collection Act 1997. This amendment ensures that there is no possibility of double taxation in the unlikely circumstance where both Acts could apply to a constitutionally protected fund. [Item 3]

Clarification of surchargeable contributions

13.5 Section 8 of the Act determines the amount of a member's surchargeable contributions for a financial year. Subsection 8(1) is amended to insert two paragraphs to clarify the basis of calculation of surchargeable contributions for accumulation schemes and for defined benefits schemes.

13.6 For accumulation schemes surchargeable contributions are based on the amounts actually paid to the superannuation provider.

13.7 For defined benefits schemes surchargeable contributions are based on annual salaries multiplied by the notional surchargeable contributions factor.

[Item 4]

13.8 Subsection 8(2), which determines the amount of surchargeable contributions for a member of a superannuation (accumulated benefits) fund, is being amended so that any allocated surplus amount for a member is included in the member's surchargeable contributions. [Item 5, 6 and 8)]

13.9 An 'allocated surplus amount' is any amount allocated by a superannuation (accumulated benefits) provider for the benefit of a member of a superannuation fund for the financial year that exceeds an amount that, in the opinion of an eligible actuary according to Australian actuarial practice, is reasonable having regard to:

·
the amounts paid by or for the member to the provider; and
·
the fund's investment earnings relating to the member's interest in the fund; and
·
any other relevant matters.

13.10 An allocation would be reasonable if, for example, it represents an ordinary return on the investment. An amount allocated from fund surplus which substantially increased a member's benefit, for example, would be an unreasonable allocation that is an allocated surplus amount.

Item 40 - definition of allocated surplus amount]

13.11 Subsection 8(3) determines the amount of surchargeable contributions for a member of a defined benefits fund based on a notional surchargeable contributions factor. The definition of 'notional surchargeable contributions factor' in section 43 of the Act is being amended to ensure that, if appropriate, a notional surchargeable contributions factor for a member for a particular year can be determined for an unfunded defined benefits scheme and for a funded defined benefits scheme that does not actually receive any contributions in that year because, for example, it is on a contributions holiday. [Item 42]

Statements given by superannuation providers

13.12 Section 13 of the Act requires superannuation providers to give, by the notification date, statements relating to the amount of surchargeable contributions received for each member to the Commissioner. The amount of surchargeable contributions to be reported are those amounts identified in section 8. Section 14 of the Act allows the Commissioner to specify the form in which the statements are given.

Statements by defined benefit providers

13.13 The amendments ensure that the interrelationship between section 8 and section 13 applies appropriately to defined benefit superannuation fund providers. That is, subsection 8(2), paragraph 8(4)(a), subsection 13(1), subsection 13(2) and the definition of 'contributed amounts' in section 43 are being amended to ensure that defined benefit superannuation fund providers, like accumulated benefit superannuation providers, are required to report surchargeable contributions for a member. [Items 5, 6, 7, 8 and 9; Item 41 - new definition of 'contributed amounts']

Other amendments concerning statements to be given by superannuation providers

13.14 To facilitate the administration of the surcharge by enabling the Commissioner to grant an extension of time for the provision of information and to assist in the tracing of members who have been transferred from one superannuation provider to another, section 13 is also being amended to:

·
give the Commissioner a discretion to allow an extension of time to superannuation providers to give section 13 statements [Items 9, 10 and 12] ;
·
allow for regulations to be made to specify the type of information required in section 13 statements [Items 11, 14, 15 and 16] ;
·
require a superannuation provider who has transferred benefits for a member to another superannuation provider to advise the Commissioner of the name and address of that other provider [Item 13] ;
·
require a superannuation provider who has received benefits transferred from another provider to give that other provider a statement setting out any matters required by regulations [Item 16 - new subsection 13(4A)] ;
·
ensure that a superannuation provider who gives a statement to the Commissioner under section 13 is required to advise the member only of the details of surchargeable contributions shown on the statement no later than 12 months after the statement is given. This advice can be included on the annual statement required under the Superannuation Industry (Supervision) Act 1993 and may be given to the member prior to being sent to the Commissioner; [Item 17]
·
ensure that the penalty provisions apply to both natural persons and body corporates and insert notes explaining the operation of the Criminal Code and the Crimes Act 1914 [Item 18] ; and
·
clarify that subsection 13(7) applies in relation to the member for a financial year and ensure that the statement includes the total of allocated surplus amounts for the member. [Items 19 and 20]

13.15 Subsection 14(4) is also being amended to ensure that the penalty provisions apply to both natural persons and body corporates and to insert notes explaining the operation of the Criminal Code and the Crimes Act 1914. [Item 21]

13.16 New subsection 14(4A) is being inserted to enable the Commissioner to seek information from a member about the holder of the member's surchargeable contributions. This amendment will facilitate the administration of the surcharge where the member has transferred his or her benefits to another superannuation provider as the member should know where his or her superannuation contributions are held. [Item 22]

Liability for surcharge payable by unfunded defined benefit providers

13.17 Section 16 of the Act provides for the deferment of payment of a surcharge liability for a member of an unfunded defined benefits superannuation fund until the benefit is paid by the fund to the member. However, a member has the option of paying the liability directly once a surcharge liability arises.

13.18 Subsection 16(6) is amended so that, consistent with other superannuation providers, an unfunded defined benefits superannuation provider has a period of one month after the benefit becomes payable for the payment of the surcharge debt rather than having to pay the liability when the benefit is paid. [Item 23]

13.19 Subsection 16(7) is amended to clarify that where a member makes a direct payment of surcharge prior to the benefit becoming payable, that payment will be applied to reduce the whole amount by which the surcharge debt account is in debit. Currently the payment could only be applied to reduce the amount of deferred surcharge debt and not any accumulating interest. [Item 24]

Credit or refund of advance instalment

13.20 Section 17 concerns the application of advance instalment of surcharge payable by superannuation providers. Subsection 17(2) and 17(3) of the Act are amended to ensure that the advance instalment is first used to reduce any surcharge liabilities the provider may have under this Act before an amount is refunded to the provider. [Item 25]

Amendment of assessments

13.21 Section 18 of the Act provides that where a surcharge liability is raised due to the non-quotation of a tax file number (TFN) and the TFN is subsequently quoted or ascertained by the Commissioner, the Commissioner must, if appropriate, amend the assessment and refund any excess surcharge to the holder of the contributions.

13.22 Paragraph 18(1)(b), which allows the Commissioner to amend the assessment only if the provider has actually paid the assessed amount, is being removed. That is, if an assessment is raised due to the non-quotation of a TFN and the TFN is subsequently quoted or ascertained by the Commissioner, the Commissioner will be able to amend the assessment prior to the original assessment being paid. [Item 26]

13.23 Section 19 relates to the amendment of surcharge assessments. Subsection 19(2) outlines some of the matters the Commissioner can take into account when amending an assessment. A technical amendment is made to subsection 19(3) to allow the Commissioner to amend an assessment to take account of any of the matters referred to in subsection 19(2). [Item 27]

13.24 Subsection 19(5), which outlines what the Commissioner must do if an amended assessment is made reducing the surcharge, is redrafted to ensure that:

·
an amount can be credited to the holder of surchargeable contributions even where the total amount previously assessed to be paid has not been paid; and
·
any excess amount is to be applied to reduce any surcharge liability the provider may have under this Act before an amount is refunded to the provider

[Item 28]

Assessments of additional surcharge

13.25 Section 20 provides that where there is a change to factors affecting a surcharge liability and the superannuation provider to whom the original assessment was made is no longer the holder of the surchargeable contributions, a new assessment may be made to the current holder of the contributions.

13.26 An amendment is made to paragraph 20(6)(b) to ensure that the amount of any reduction in the surcharge is first used to reduce any surcharge liabilities the provider may have under this Act before an amount is refunded to the provider. [Item 29]

Late payment penalty

13.27 Section 25 of the Act applies a late payment penalty where a liability to surcharge, advance instalment or interest is not paid by the due date. To enhance the administration of the Act and make it consistent with other taxing provisions, the late payment penalty will be an interest penalty on the unpaid amount at the rate provided for interest payments by section 214A of the Income Tax Assessment Act 1936. That rate is based on the 13 week Treasury Bond rate.

13.28 To further bring the arrangements into line with current commercial practice, the late payment penalty is to accrue daily. That is, the late payment interest component will accumulate on all unpaid amounts from the day after the date a payment was due and will apply to all components of an account, including interest components already accrued.

13.29 The amendment will also provide for judgment to be made in respect of the debt and allow the Commissioner to sue for the recovery of any unpaid amounts.

[Item 30]

Secrecy

13.30 Section 32 of the Act imposes secrecy obligations on a person who acquires information on the affairs of another person under the Act.

13.31 Item 31 makes a technical amendment to the notes to subsection 32(2) to provide greater explanation of the application of the Criminal Code and the Crimes Act 1914.

13.32 Item 32 inserts a note to subsection 32(8) to explain the application of the Criminal Code.

Exclusion of certain persons

13.33 New section 34A is being inserted into the Act to ensure that the Act does not apply to a person who is a judge of a Territory at the commencement of the Act. [Item 33]

Information to be given to the Commissioner

13.34 Section 35 of the Act concerns the information which must be given to the Commissioner by a superannuation provider who pays an amount of surcharge or advance instalment. Section 35 is revised so that a superannuation provider must give the Commissioner, within a period notified by the Commissioner, a statement setting out such information as is required by the regulations. The amendment also provides for a penalty where such information is not provided. [Item 34]

Contravention notice

13.35 The Act is amended to insert a new section 35A which provides for the Commissioner to serve a contravention notice on a provider who has contravened the provisions dealing with the provision of information.

13.36 The penalties currently provided for in the Act are offences punishable on prosecution. To reduce the need for prosecution, and the delays this would entail in the majority of cases, an administrative penalty scheme is considered appropriate for the breaches of the reporting requirements contained in section 13, 14 or 35 of the Act. The penalty is $500 for each week or part of a week in which the reports are not provided to the Commissioner.

Item 34]

Authorised officers

13.37 Section 36 of the Act allows the Commissioner to authorise a certain officer or employee to be an authorised officer. A technical amendment is made to section 36 to provide that such authorisation is only applicable to Part 6 of the Act rather than the Act as a whole. [Item 35]

Record keeping requirements

13.38 Section 40 of the Act imposes certain record keeping requirements on superannuation providers for the purposes of the Act. A technical amendment is made to subsection 40(5) to ensure that the penalty provisions apply to both natural persons and body corporates. The amendment also inserts notes explaining the operation of the Criminal Code and the Crimes Act 1914. [Item 36]

Commissioner may collect money from third parties

13.39 New section 40A is being inserted into the Act to enable the Commissioner to collect funds held for or on behalf of a holder of surchargeable contributions to meet a surcharge liability. [Item 37]

Regulations

13.40 Section 42 of the Act provides that the Governor-General may make regulations for the purposes of the Act. Section 42 is revised to clarify that the general regulation making power extends to the manner in which statements are to be provided to the Commissioner. The revised section also allows regulations to be made to insert a penalty, not exceeding a fine of 5 penalty units, for offences against the regulations. [Item 38]

Definitions

13.41 Section 43 of the Act defines a number of terms used in the Act.

13.42 A definition of 'allocated surplus amount' is being inserted into the Act. An 'allocated surplus amount' is any amount allocated by a superannuation (accumulated benefits) provider for the benefit of a member of a superannuation fund for the financial year that exceeds an amount that, in the opinion of an eligible actuary according to Australian actuarial practice, is reasonable having regard to:

·
the amounts paid by or for the member to the provider; and
·
the fund's investment earnings relating to the member's interest in the fund; and
·
any other relevant matters.

Item 40]

13.43 The definition of 'notional surchargeable contributions factor' is being amended to ensure that, if appropriate, a notional surchargeable contributions factor for a member for a particular year can be determined for an unfunded defined benefits scheme and for a funded defined benefits scheme that does not actually receive any contributions in that year because, for example, it is on a contributions holiday. [Item 42]

13.44 Technical amendments are made to the definitions of:

·
'adjusted taxable income' [Item 39] ;
·
'contributed amounts' [Item 41] ;
·
'superannuation contributions surcharge or surcharge' [Item 43] ; and
·
'unfunded defined benefits superannuation scheme' [Item 45] .

13.45 In addition, the definition of 'surcharge' is removed because it is included in the definition of 'superannuation contributions surcharge or surcharge'. [Item 44]

Chapter 14 - Amendments to the Superannuation Contributions Tax (Consequential Amendments) Act

14.1 Schedule 5 of the Bill amends the Superannuation Contributions Tax (Consequential Amendments) Act 1997.

14.2 The amendments contained in Schedule 5 of the Bill simply correct cross references in the Act that refer to provisions in the Retirement Savings Accounts Act 1997. That Act was renumbered in the Parliament and these amendments simply reflect that renumbering. [Items 1 to 18]

Chapter 15 - Amendments to the Superannuation Industry (Supervision) Act

15.1 Schedule 6 of the Bill amends the Superannuation Industry (Supervision) Act 1993.

15.2 A technical amendment is made to this Act to insert an appropriate reference to the Superannuation Contributions Tax (Members of Constitutionally Protected Superannuation Funds) Assessment and Collection Act 1997 in the definition of 'Surcharge Acts' in section 299W. [Item 1]

Chapter 16 - Amendments to the Superannuation (Resolution of Complaints) Act

16.1 Schedule 7 of the Bill amends the Superannuation (Resolution of Complaints) Act 1993.

16.2 The amendments to this Act are of a technical nature to insert appropriate references to the Superannuation Contributions Tax (Members of Constitutionally Protected Superannuation Funds) Assessment and Collection Act 1997 in subsection 3(2) and section 15CA. [Items 1 and 3]

16.3 Subsection 15CA(1) is also revised to remove a reference to 'contributed amounts' which is no longer appropriate. [Item 2]

Chapter 17 - Amendments to the Taxation (Interest on Overpayments and Early Payments) Act

17.1 Schedule 8 of the Bill amends the Taxation (Interest on Overpayments and Early Payments) Act 1983.

17.2 The Bill inserts new Part IIE into the Act to enable interest to be paid on overpayments resulting from amendments to surcharge assessments made under the Superannuation Contributions Tax (Members of Constitutionally Protected Superannuation Funds) Assessment and Collection Act 1997.

17.3 The amendments provide that where a person has paid the assessed amount of surcharge and as a result of an amendment the surcharge liability is reduced, then interest is payable by the Commissioner of Taxation on the amount of the reduction. The rate of interest is that provided for by section 214A of the Income Tax Assessment Act 1936. That rate is based on the 13 week Treasury Bond rate.

Item 1]

Chapter 18 - Amendment to the Termination Payments Tax (Assessment and Collection) Act

18.1 Schedule 9 of the Bill amends the Termination Payments Tax (Assessment and Collection) Act 1997 (the Act).

Amendment of assessments

18.2 Section 12 of the Act relates to the amendment of surcharge assessments. Subsection 12(4), which outlines what the Commissioner must do if an amendment assessment is made reducing the surcharge, is redrafted to ensure that:

·
an amount can be credited to the taxpayer even where the total amount previously assessed to be paid has not been paid; and
·
any excess amount is to be applied to reduce any surcharge liability the taxpayer may have under this Act before an amount is refunded to the taxpayer.

Item 1]

Late payment penalty

18.3 Section 16 of the Act applies a late payment penalty where a liability to surcharge or interest is not paid by the due date. To enhance the administration of the Act and make it consistent with other taxing provisions, the late payment penalty will be an interest penalty on the unpaid amount at the rate provided for interest payments by section 214A of the Income Tax Assessment Act 1936. That rate is based on the 13 week Treasury Bond rate.

18.4 To further bring the arrangements into line with current commercial practice, the late payment penalty is to accrue daily. That is, the late payment interest component will accumulate on all unpaid amounts from the day after the date a payment was due and will apply to all components of an account, including interest components already accrued.

18.5 The amendment will also provide for judgment to be made in respect of the debt and allow the Commissioner to sue for the recovery of any unpaid amounts.

Item 2]

Secrecy

18.6 Section 23 of the Act imposes secrecy obligations on a person who acquires information on the affairs of another person under the Act.

18.7 Item 3 makes a technical amendment to the notes to subsection 32(2) to provide greater explanation of the application of the Criminal Code and the Crimes Act 1914.

Authorised officers

18.8 Section 24 of the Act allows the Commissioner to authorise a certain officer or employee to be an authorised officer. A technical amendment is made to section 24 to provide that such authorisation is only applicable to Part 6 of the Act rather than the Act as a whole. [Item 4]

Record keeping requirements

18.9 Section 28 of the Act imposes certain record keeping requirements on employers for the purposes of the Act. A technical amendment is made to subsection 28(5) to ensure that the penalty provisions apply to both natural persons and body corporates. The amendment also inserts notes explaining the operation of the Criminal Code and the Crimes Act 1914. [Item 5]

Commissioner may collect money from third parties

18.10 New section 28A is being inserted into the Act to enable the Commissioner to collect funds held for or on behalf of a holder of surchargeable contributions to meet a surcharge liability. [Item 6]

Definitions

18.11 Section 31 of the Act defines a number of terms used in the Act. A technical amendment is being made to the definition of 'termination payments surcharge or surcharge' [Item 7] .

PART 4 - Superannuation Contributions Tax Imposition Amendment Bill 1997

Part 4 of the Explanatory Memorandum (Chapter 19) explains the provisions of the Superannuation Contributions Tax Imposition Amendment Bill 1997.

Chapter 19 - Superannuation Contributions Tax Imposition Act 1997

Overview

19.1 This Bill amends the Superannuation Contributions Tax Imposition Act 1997 (the Imposition Act) to round the rate of superannuation contributions surcharge imposed under that Act to 5 decimal places. The Bill also makes technical amendments to the provisions in the Imposition Act which deal with the actions the Commissioner must take where a member has not provided his or her tax file number (TFN).

Explanation of the provisions

Title and commencement of the Act

19.2 When the Bill is enacted it will be called the Superannuation Contributions Tax Imposition Amendment Act 1997. [Clause 1]

19.3 The Act is to commence on the day it receives the Royal Assent. Schedule 1 of the Act will be taken to have commenced on 5 June 1997 immediately after the commencement of the Imposition Act. [Clause 2]

Schedule 1

19.4 Section 5 of the Imposition Act identifies the rate of superannuation contributions surcharge imposed on the surchargeable contributions of a member of a superannuation fund or scheme.

19.5 Item 1 and Item 2 provide that the rate of superannuation contributions surcharge imposed under the Imposition Act is rounded to 5 decimal places.

19.6 Item 3 and Item 4 make technical amendments to subsection 5(3) of the Imposition Act to ensure that, if a member does not quote his or her TFN and the Commissioner of Taxation is unable to find it out, superannuation contributions surcharge will be payable only on the surchargeable contributions received by a superannuation provider for the member in the relevant financial year rather than on all contributions received for the member in that year.

19.7 Item 5 makes a technical amendment to subsection 5(4) to recognise that superannuation contributions surcharge is imposed under the Act rather than by the Commissioner.

PART 5 - Termination Payments Tax Imposition Amendment Bill 1997

Part 5 of the Explanatory Memorandum (Chapter 20) explains the provisions of the Termination Payments Tax Imposition Amendment Bill 1997.

Chapter 20 - Termination Payments Tax Imposition Amendment Bill 1997

Overview

20.1 This Bill amends the Termination Payments Imposition Act 1997 (the Imposition Act) to round the rate of termination payments surcharge imposed under that Act to 5 decimal places.

Explanation of the provisions

Title and commencement of the Act

20.2 When the Bill is enacted it will be called the Termination Payments Tax Imposition Amendment Act 1997. [Clause 1]

20.3 The Act is to commence on the day it receives the Royal Assent. Schedule 1 of the Act will be taken to have commenced on 5 June 1997 immediately after the commencement of the Imposition Act. [Clause 2]

Schedule 1

20.4 Section 5 of the Imposition Act identifies the rate of termination payments surcharge imposed on certain termination payments.

20.5 Item 1 and Item 2 provide that the rate of termination payments surcharge imposed under the Imposition Act is rounded to 5 decimal places.


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