Superannuation Contributions Determination

SCD 2005/4

Superannuation contributions: what are the surchargeable contributions threshold and the indexable amounts for the 2005-2006 financial year under the Superannuation Contributions Tax Imposition Act 1997?

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FOI status:

may be released

Preamble

1. The Superannuation Contributions Tax Imposition Act 1997 (SCTIA) provides that for each financial year the surchargeable contributions threshold and each indexable amount are to be amounts which reflect movements in full-time adult average weekly ordinary time earnings (AWOTE).^[1]

Surchargeable contributions threshold

2. In accordance with subsection 6(2) of the SCTIA, the surchargeable contributions threshold is the amount worked out using the formula:

previous threshold X indexation factor X (current charge percentage / previous charge percentage)


3. The previous threshold is the surchargeable contributions threshold for the financial year immediately before the relevant financial year. For the purpose of this Determination, the previous threshold as advised by Superannuation Contributions Determination SCD 2004/4 is $4,273.

4. The indexation factor is worked out under subsections 9(4) and 9(5) of the Superannuation Contributions Tax (Assessment and Collection) Act 1997. This factor is calculated by dividing the index number for the last quarter in the current March year by the index number for the last quarter in the previous March year. The index number for a quarter is the AWOTE estimate for the middle month of the quarter published by the Australian Statistician. The Australian Statistician's AWOTE estimate for February 2005 was $992.90 and the estimate for February 2004 was $947.80. This produces an indexation factor of 1.048.

5. For the 2005-2006 financial year, the current charge percentage - the number that is the employer's charge percentage under subsection 19(2) of the Superannuation Guarantee (Administration) Act 1992 for the relevant financial year - is 9. The previous charge percentage - the number that is the employer's charge percentage under subsection 19(2) of that Act, for the financial year immediately before the relevant financial year - is also 9.

6. Applying the formula in subsection 6(2) of the SCTIA, the surchargeable contributions threshold for the 2005-2006 financial year is:

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$4,478.

Indexable amounts

7. In accordance with subsection 7(1) of the SCTIA, each indexable amount is worked out using the formula:

previous indexable amount x relevant indexation factor


8. The previous indexable amount is the indexable amount for the financial year immediately before the indexing financial year. An indexing financial year is the 2004-2005 financial year or a later financial year. For the purpose of this Determination, the previous indexable amounts as set out in Superannuation Contributions Determination SCD 2004/4 are $99,710 (lower income amount) and $121,075 (higher income amount).

9. The relevant indexation factor is the indexation factor for the indexing financial year and is calculated in the same way as described in paragraph 4 of this Determination. The factor is 1.048.

10. For the purpose of subsection 5(1AA) of the SCTIA, the indexable amounts (as calculated under section 7) for the 2005-2006 financial year are:

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$104,496 (the lower income amount); and

•

$126,887 (the higher income amount).

11. These indexable amounts are relevant for working out the rate of the superannuation contributions surcharge that applies to a member in a particular year under section 5 of the SCTIA. Superannuation Contributions Determination SCD 2005/5 provides details of the calculation of the amount represented by 'A' in the first formula contained within subsection 5(1) of the SCTIA.

Date of effect

12. This Determination applies to the 2005-2006 financial year.

Commissioner of Taxation
8 June 2005

Not previously issued in draft form.

Previous Determinations:

SCD 97/1

SCD 97/4

SCD 98/3

SCD 98/6

SCD 1999/1

SCD 1999/4

SCD 2000/4

SCD 2001/4

SCD 2002/4

SCD 2003/4

SCD 2004/4

References

ATO references:
NO 2004/6292

Related Rulings/Determinations:

SCD 2005/1
SCD 2005/2
SCD 2005/3
SCD 2005/5

Subject References:
average weekly ordinary time earnings
current charge percentage
financial year
higher income amount
indexable amount
indexation
indexation factor
lower income amount
previous charge percentage
superannuation contributions
surcharge
surcharge threshold
surchargeable contributions threshold
threshold

Legislative References:
SCT(AC)A 1997 9(4)
SCT(AC)A 1997 9(5)
SCTIA 1997 5
SCTIA 1997 5(1)
SCTIA 1997 5(1AA)
SCTIA 1997 6(2)
SCTIA 1997 7
SCTIA 1997 7(1)
SGAA 1992 19(2)