SUPERANNUATION CONTRIBUTIONS TAX (ASSESSMENT AND COLLECTION) ACT 1997

PART 2 - LIABILITY TO SURCHARGE AND ADVANCE INSTALMENTS  

SECTION 8   SURCHARGEABLE CONTRIBUTIONS  

8(1)   Application.  

This section explains what are the surchargeable contributions of a member for a financial year and how they are to be worked out.

8(2)   Member other than a member of a defined benefits superannuation scheme.  

If:


(a) there are any contributed amounts for a financial year in relation to a member other than a member of a defined benefits superannuation scheme; and


(b) where the relevant superannuation provider is the trustee of a superannuation fund or of an approved deposit fund - the superannuation fund is a complying superannuation fund or the approved deposit fund is a complying approved deposit fund, as the case may be, for the purposes of the year of income comprising the financial year;

the surchargeable contributions of the member for the financial year are the sum of:


(c) so much of the amounts referred to in subparagraph (a)(i) of the definition of contributed amounts in section 43 as:


(i) are taxable contributions under subparagraph 274(1)(a)(i) , (b)(ii) , (ba)(i) or (ba)(iv) or paragraph 274(1)(d) or (e) of the Income Tax Assessment Act; or

(ii) are allowed as deductions to the member under section 82AAT of that Act; or

(iii) subject to subsection (2A), constitute amounts accrued after 20 August 1996 that are eligible termination payments under paragraph (a) of the definition of eligible termination payment in subsection 27A(1) of that Act and are rolled-over on or after 1 July 1997; and


(d) any amounts referred to in subparagraph (a)(ii) or (iii) of the definition of contributed amounts in section 43 .

8(2A)   [Eligible termination payments]  

If an eligible termination payment within the meaning of subparagraph (2)(c)(iii) has been made or is made to or for a taxpayer after 20 August 1996, surcharge is payable only on the part of the reduced amount of the eligible termination payment that is worked out using the formula:


Post-20 August 1996 period
Total period      
× Eligible termination payment

where:

post-20 August 1996 period means the number of days in the period of the taxpayer's employment for which the eligible termination payment was made that occurred after 20 August 1996.

reduced amount of an eligible termination payment is the amount remaining after deducting from the amount of the payment any post-June 1994 invalidity component or CGT exempt component of the payment or any part of the payment that was made from an employee share acquisition scheme.

total period means the number of days in the period of the taxpayer's employment for which the eligible termination payment was made.

8(3)   Member of defined benefits superannuation scheme.  

The surchargeable contributions for a financial year of a member of a defined benefits superannuation scheme are the amounts that constitute the actuarial value of the benefits that accrued to, and the value of the administration expenses and risk benefits provided in respect of, the member for the financial year.

8(4)   Value of benefits and expenses - financial year earlier than 1999-2000 financial year.  

The actuarial value of the benefits that accrued to, and the value of the administration expenses and risk benefits provided in respect of, a member of a defined benefits superannuation scheme for the 1996-97 financial year or for either of the next 2 financial years is the amount worked out using the formula:


Annual salary   ×   Notional surchargeable contributions factor

where:

annual salary
means:


(a) if paragraph (b) does not apply - the amount that is the member's annual salary for the financial year; or


(b) if another amount is taken to be the member's annual salary for the purposes of the scheme as it applies to the member for the financial year - that other amount.

notional surchargeable contributions factor
means the factor applying to the member for the financial year worked out by an eligible actuary in accordance with:


(a) the method set out in Superannuation Contributions Ruling SCR 97/1; or


(b) if the Commissioner approves in writing another method as being appropriate in relation to the member for the financial year, being a method that excludes contributions made by the member for which the member is not entitled to an income tax deduction under the Income Tax Assessment Act or under the Income Tax Assessment Act 1997 - the method so approved.

8(5)   Value of benefits and expenses - 1999-2000 financial year or a later financial year.  

The actuarial value of the benefits that accrued to, and the value of the administration expenses and risk benefits provided in respect of, a member of a defined benefits superannuation scheme for the 1999-2000 financial year or a later financial year is an amount worked out using:


(a) the method set out in the regulations, being a method that excludes Government co-contributions made under the Superannuation (Government Co-contribution for Low Income Earners) Act 2003 and contributions made by the member for which the member is not entitled to an income tax deduction under the Income Tax Assessment Act or under the Income Tax Assessment Act 1997 ; or


(b) if the Commissioner approves in writing another method as being appropriate in relation to the member for the financial year, being a method that excludes Government co-contributions made under the Superannuation (Government Co-contribution for Low Income Earners) Act 2003 and contributions made by the member for which the member is not entitled to an income tax deduction under the Income Tax Assessment Act or under the Income Tax Assessment Act 1997 - the method so approved.

8(6)   Regulations.  

Regulations made for the purposes of paragraph (5)(a) may specify, or make provision for the Commissioner to specify in writing, different methods in relation to different superannuation schemes, different classes of superannuation schemes or different classes of members of a superannuation scheme.

8(7)   Transitional provision for 1996-97 financial year.  

For the 1996-97 financial year, a member's surchargeable contributions are to be worked out only for the part of that financial year that started immediately after 7.30 pm by legal time in the Australian Capital Territory on 20 August 1996.

8(8)   Reduced surchargeable contributions  

The amount of the surchargeable contributions of a member for a financial year is the amount worked out under subsection (2) or (3) (as appropriate), reduced by the amount worked out under subsection (9), if:


(a) an eligible termination payment is made to the member in the financial year from the superannuation fund, approved deposit fund or RSA; and


(b) the eligible termination payment has an excessive component.

8(9)   [Working out reduction]  

The amount of the reduction is worked out as follows: Amount of the reduction


Step 1.

Work out the amount that would have been the taxed element of the retained amount of the post-June 83 component of the eligible termination payment if the amount of the excessive component of the eligible termination payment had been nil.


Step 2.

Work out the taxed element of the retained amount of the post-June 83 component of the eligible termination payment.


Step 3.

Subtract the result of step 2 from the result of step 1.


Step 4.

Divide the result of step 3 by 0.85.


Step 5.

Subtract the result of step 3 from the result of step 4.


Step 6.

Add the result of step 5 to the excessive component of the eligible termination payment.


Step 7.

Identify the amount of the surchargeable contributions (apart from subsection (8)) of the member reported for the financial year by the entity that paid the eligible termination payment.


Step 8.

Identify the lesser of the results of steps 6 and 7 (or either result if they are the same).




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