Tax Laws Amendment (Fairer Taxation of Excess Concessional Contributions) Act 2013 (118 of 2013)

Schedule 1   Fairer taxation of excess concessional contributions

Part 1   Main amendments

Taxation Administration Act 1953

2   At the end of Chapter 2 in Schedule 1

Add:

Part 2-35 - Excess concessional contributions

Division 95 - Excess concessional contributions charge

Table of Subdivisions

Guide to Division 95

95-A Object of Division

95-B Excess concessional contributions charge

Guide to Division 95

95-1 What this Division is about

You are liable to pay a charge on the income tax you pay on excess concessional contributions.

The charge is applied at a uniform rate that is the same as the shortfall interest charge.

The period for the excess concessional contributions charge starts at the start of the income year and ends just before tax is due to be paid under your first assessment for the year.

Subdivision 95-A - Object of Division

Table of sections

95-5 Object of Division

95-5 Object of Division

The object of this Division is to neutralise benefits that taxpayers could otherwise receive from *excess concessional contributions, so that they do not receive an advantage in the form of:

(a) the later time at which *tax is collected, as compared to tax that is collected through the Pay as you go system; and

(b) the earnings on the contributions, which receive a concessional tax rate and remain in superannuation even if the contributions are released under Division 96.

Subdivision 95-B - Excess concessional contributions charge

Table of sections

95-10 Liability to excess concessional contributions charge

95-15 Amount of excess concessional contributions charge

95-20 When excess concessional contributions charge is due and payable

95-25 General interest charge

95-10 Liability to excess concessional contributions charge

(1) If:

(a) you have *excess concessional contributions for a *financial year; and

(b) you are liable to pay an amount of *tax (your actual tax ) for the corresponding income year; and

(c) your actual tax exceeds the amount of tax you would be liable to pay for the income year if the excess concessional contributions were disregarded;

the excess is an amount of tax on which you are liable to pay excess concessional contributions charge .

Note 1: Excess concessional contributions are included in assessable income and give rise to a tax offset: see section 291-15 of the Income Tax Assessment Act 1997.

Note 2: In this Act, tax is an assessed amount: see subsection 995-1(1) of the Income Tax Assessment Act 1997.

(2) If you would not be liable to pay *tax for the income year if the *excess concessional contributions were disregarded, apply paragraph (1)(c) as if you would be liable to pay a nil amount of tax.

Period for which the charge is payable

(3) The liability is for each day in the period:

(a) beginning on the first day of the income year; and

(b) ending on the day before the day on which *tax under your first notice of assessment for that income year is due to be paid, or would be due to be paid if there were any.

95-15 Amount of excess concessional contributions charge

The *excess concessional contributions charge for a day is worked out by multiplying the rate worked out under section 4 of the Superannuation (Excess Concessional Contributions Charge) Act 2013 for that day by the sum of the following amounts:

(a) the amount of *tax on which you are liable to pay the charge;

(b) the excess concessional contributions charge on that amount from previous days.

95-20 When excess concessional contributions charge is due and payable

(1) The *excess concessional contributions charge you are liable to pay for an income year is due and payable on the day on which *tax is due to be paid under your first notice of assessment for that income year that includes an amount of tax on which you are liable to pay the charge.

Note: For when income tax is due and payable, see section 5-5 of the Income Tax Assessment Act 1997.

Determination required

(2) An amount of *excess concessional contributions charge is only due and payable if the Commissioner gives you an *excess concessional contributions determination stating the amount of the charge (although it may be taken by subsection (1) to have been due and payable at a time before the determination was made).

Note: For excess concessional contributions determinations, see Division 97.

Amended determinations

(3) However, if the Commissioner amends your *excess concessional contributions determination, any extra charge resulting from the amendment is due and payable 21 days after the Commissioner gives you notice of the amended determination.

95-25 General interest charge

If an amount of *excess concessional contributions charge or *shortfall interest charge on excess concessional contributions charge that you are liable to pay remains unpaid after the time by which it is due to be paid, you are liable to pay the *general interest charge on the unpaid amount for each day in the period that:

(a) begins on the day on which the amount was due to be paid; and

(b) ends on the last day on which, at the end of the day, any of the following remains unpaid:

(i) the excess concessional contributions charge or shortfall interest charge;

(ii) the general interest charge on any of the excess concessional contributions charge or shortfall interest charge.

Note 1: The general interest charge is worked out under Part IIA.

Note 2: Shortfall interest charge is worked out under Division 280 in this Schedule.

Note 3: See section 5-10 of the Income Tax Assessment Act 1997 for when the amount of shortfall interest charge becomes due and payable.

Division 96 - Releasing money from superannuation

Table of Subdivisions

96-A Releasing money from superannuation

Subdivision 96-A - Releasing money from superannuation

Guide to Subdivision 96-A

96-1 What this Subdivision is about

You may elect to release up to 85% of your excess concessional contributions for a financial year from a superannuation interest.

Superannuation providers will usually be required to pay an amount from the superannuation interest. However, for certain interests the provider may choose whether or not to pay.

Released amounts are paid by the superannuation provider to the Commissioner.

You get a credit for the released amount. Surplus credits are refunded to you under Division 3A of Part IIB.

Table of sections

Requesting a release authority

96-5 Electing to release money from superannuation

Issuing a release authority to superannuation provider

96-10 Issuing a release authority to a superannuation provider

96-15 Varying and revoking a release authority

Complying with a release authority

96-20 Obligations of superannuation providers

96-25 Voluntary compliance with a release authority relating to voluntary release interests

96-30 Meaning of maximum available release amount

96-35 Notifying Commissioner

96-40 Notifying individual of unsuccessful release attempt

96-45 Compensation for acquisition of property

Consequences of releasing amounts

96-50 Entitlement to credits

96-55 Interest for late payments of money received by the Commissioner in accordance with release authority

96-60 Income tax treatment of amounts released - proportioning rule does not apply

Requesting a release authority

96-5 Electing to release money from superannuation

Original determinations

(1) If you receive an *excess concessional contributions determination, you may elect to release from a *superannuation interest an amount not exceeding 85% of the *excess concessional contributions stated in the determination.

Note 1: For excess concessional contributions determinations, see Division 97.

Note 2: Released excess concessional contributions are not included in your non-concessional contributions (a gross-up also applies): see subsection 292-90(1A) of the Income Tax Assessment Act 1997.

Amended determinations

(2) However, if the *excess concessional contributions determination is an amended determination increasing the stated amount of your *excess concessional contributions, you may elect to release an amount not exceeding:

(a) 85% of the excess concessional contributions stated in the amended determination; less

(b) any amount you elect to release under subsection (1) in relation to an earlier determination.

Requirements for election

(3) You make the election by:

(a) notifying the Commissioner of the amount you elect to release; and

(b) identifying the *superannuation interest or interests you have from which the amount is to be released; and

(c) if you identify more than one superannuation interest - stating the amount to be released from each such interest.

(4) The election must:

(a) be in the *approved form; and

(b) be given to the Commissioner within:

(i) 21 days after receiving notice of the *excess concessional contributions determination or amended excess concessional contributions determination; or

(ii) a further period allowed by the Commissioner.

Unsuccessful elections - making a further election

(5) If:

(a) you make a valid election under this section; and

(b) the Commissioner gives you a notice under section 96-40 stating an amount (the unreleased amount ) that a *superannuation provider did not pay in relation to the release authority issued in relation to that election;

you may make a further election to release the unreleased amount from another superannuation interest you have.

(6) The further election must comply with subsection (3) and paragraph (4)(a), and must be given to the Commissioner within:

(a) 21 days after receiving the notice mentioned in paragraph (5)(b); or

(b) a further period allowed by the Commissioner.

Election is irrevocable

(7) An election under this section is irrevocable.

Issuing a release authority to superannuation provider

96-10 Issuing a release authority to a superannuation provider

(1) If you make a valid election under section 96-5 in relation to *excess concessional contributions you have for a *financial year, the Commissioner must issue a release authority to each *superannuation provider that holds a *superannuation interest identified in the election.

(2) The release authority must:

(a) state the amount to be released from the *superannuation interest, as stated in the election; and

(b) be dated; and

(c) contain any other information that the Commissioner considers relevant.

96-15 Varying and revoking a release authority

The Commissioner may vary or revoke a release authority at any time before the Commissioner receives a payment relating to the release authority.

Complying with a release authority

96-20 Obligations of superannuation providers

(1) A *superannuation provider that has been issued with a release authority under section 96-10 must, within 7 days after the release authority is issued, pay to the Commissioner the lesser of:

(a) the amount stated in the release authority; and

(b) the sum of the *maximum available release amounts for each *superannuation interest held by the superannuation provider for the individual in *superannuation plans.

Note 1: Subsection 288-95(3) provides for an administrative penalty for failing to comply with this section.

Note 2: For the taxation treatment of the payment, see section 96-60.

Exception - interests not subject to compulsory release

(2) However, the *maximum available release amount for a *superannuation interest is not to be included in the sum worked out under paragraph (1)(b) if the interest is of any of the following kinds (a voluntary release interest ):

(a) a *defined benefit interest;

(b) a superannuation interest in a *non-complying superannuation fund;

(c) a superannuation interest that is treated as a separate interest under regulations made for the purposes of section 307-200 of the Income Tax Assessment Act 1997 in circumstances where the interest is supporting a *superannuation income stream.

96-25 Voluntary compliance with a release authority relating to voluntary release interests

(1) A *superannuation provider that has been issued with a release authority under section 96-10 may, within 7 days after the release authority is issued, pay to the Commissioner the lesser of:

(a) the amount stated in the release authority; and

(b) the sum of the *maximum available release amounts for each voluntary release interest held by the superannuation provider for the individual in *superannuation plans.

(2) However, the amount mentioned in paragraph (1)(a) must be reduced by any amount the provider pays to the Commissioner under section 96-20 in relation to the release authority.

96-30 Meaning of maximum available release amount

The maximum available release amount for a *superannuation interest at a particular time is the total amount of all the *superannuation lump sums that could be payable from the interest at that time.

96-35 Notifying Commissioner

(1) A *superannuation provider that has been issued with a release authority under section 96-10 must notify the Commissioner of a payment made in accordance with this Subdivision.

(2) A *superannuation provider that:

(a) has been issued with a release authority under section 96-10; and

(b) is not required to pay an amount under section 96-20, or is required under that section to pay an amount less than the amount stated in the release authority;

must notify the Commissioner that the provider is not required to comply with the release authority.

(3) A notice under this section must be given:

(a) in the *approved form; and

(b) within 7 days after the release authority is issued.

Note: Subsection 286-75(1) provides for an administrative penalty for failing to comply with this section.

96-40 Notifying individual of unsuccessful release attempt

(1) If the Commissioner:

(a) receives a notice from a *superannuation provider under subsection 96-35(2); or

(b) does not receive a payment from a superannuation provider of the full amount stated in a release authority within the time mentioned in subsection 96-20(1);

the Commissioner must give the individual a written notice under this section.

(2) The notice must:

(a) identify the *superannuation provider; and

(b) state how much of the amount stated in the release authority was not paid to the Commissioner.

96-45 Compensation for acquisition of property

(1) If the operation of section 96-20 would result in an acquisition of property (within the meaning of paragraph 51(xxxi) of the Constitution) from an entity otherwise than on just terms (within the meaning of that paragraph), the Commonwealth is liable to pay a reasonable amount of compensation to the entity.

(2) If the Commonwealth and the entity do not agree on the amount of the compensation, the entity may institute proceedings in a court of competent jurisdiction for the recovery from the Commonwealth of such reasonable amount of compensation as the court determines.

Consequences of releasing amounts

96-50 Entitlement to credits

(1) If a *superannuation provider pays an amount in relation to a release authority issued under section 96-10 in relation to an election you make, you are entitled to a credit equal to that amount.

Note: Division 3 of Part IIB provides for the treatment of credits that an entity is entitled to under a taxation law.

(2) The credit arises on the day the Commissioner receives the amount.

96-55 Interest for late payments of money received by the Commissioner in accordance with release authority

(1) You are entitled to an amount of interest worked out under subsection (2) if:

(a) the Commissioner is required under Division 3A of Part IIB to refund all or part of a credit you are entitled to under section 96-50; and

(b) the Commissioner does not so refund all or part of that credit within 60 days after receiving the payment that gave rise to the credit.

(2) The interest is to be calculated:

(a) on so much of the amount of the credit as the Commissioner fails to refund under that Division; and

(b) for the period:

(i) beginning 60 days after the day the Commissioner receives the amount; and

(ii) ending on the day the Commissioner refunds the amount mentioned in paragraph (1)(a); and

(c) on a daily basis; and

(d) at the *base interest rate for the day the interest is calculated.

96-60 Income tax treatment of amounts released - proportioning rule does not apply

Section 307-125 of the Income Tax Assessment Act 1997 (the proportioning rule) does not apply to a payment made as required or permitted under this Subdivision.

Note: Further provision about the income tax treatment of amounts released is in section 303-15 of that Act.

Division 97 - Excess concessional contributions determinations

Table of Subdivisions

97-A Excess concessional contributions determinations

Subdivision 97-A - Excess concessional contributions determinations

Guide to Subdivision 97-A

97-1 What this Subdivision is about

The Commissioner must give you a determination stating the amount of your excess concessional contributions and any excess concessional contributions charge.

Table of sections

Operative provisions

97-5 Determination of excess concessional contributions and charge

97-10 Review

Operative provisions

97-5 Determination of excess concessional contributions and charge

(1) If you have *excess concessional contributions for a *financial year, the Commissioner must make a written determination stating:

(a) the amount of those excess concessional contributions; and

(b) the amount (if any) of *excess concessional contributions charge you are liable to pay for the corresponding income year.

(2) A determination under this section is an excess concessional contributions determination .

(3) The Commissioner may amend a determination at any time.

(4) Notice of the determination may be included in any other notice given to you by the Commissioner.

(5) Notice of a determination given by the Commissioner under this section is prima facie evidence of the matters stated in the notice.

97-10 Review

If you are dissatisfied with an *excess concessional contributions determination made in relation to you, you may object against the determination in the manner set out in Part IVC.