ATO Interpretative Decision

ATO ID 2001/302 (Withdrawn)

Superannuation

• This ATO ID is withdrawn because it contains a view in respect of a provision of the Superannuation Contributions and Termination Payments Taxes Legislation Amendment Act 1999 (SCTPA 1999) that does not apply after 31st August 2000. Despite its withdrawal, this ATO ID continues to be a precedential ATO view in respect of the provision that applies up to, and including, 31st August 2000.
  This document incorporates revisions made since original publication. View its history and amending notices, if applicable.

Issue

Will the Commissioner waive the requirement for the fund to submit a new report of additional surchargeable contributions for members for a previous financial year in respect of a defined benefit improvement if the surchargeable contributions not previously brought to account are brought to account in reporting for the current financial year?

Decision

Yes. The amount of the additional surchargeable contributions can be brought to account in reporting for the current financial year. As a consequence, there is no need to submit a new report of surchargeable contributions for the previous financial year.

Facts

The scheme is a defined benefits superannuation scheme and additional benefits were granted to members in a previous financial year.

Schedule 1 to the Superannuation Contributions and Termination Payments Taxes Legislation Amendment Act 1999 (SCTPA 1999) introduced a transitional arrangement that required superannuation providers who had previously given a statement (the previous statement) as required by section 13 of the Superannuation Contributions Tax (Assessment and Collection) Act 1997 to give a corrective statement by a date fixed by the Minister by notice in the Government Gazette if the previous statement did not reflect the information set out in the SCTPA 1999.

In a notice dated 7 July 2000 and published in the Government Gazette, the date fixed by the Minister for giving corrective statements was 31 August 2000.

The fund did not submit a corrective statement by the required date and the Commissioner subsequently requested the fund to provide the corrective statement to reflect surchargeable contributions calculated in line with the standard set out in Superannuation Contributions Ruling SCR 97/1.

Discussions between the scheme trustees, the scheme actuary and the Australian Tax Office could not resolve an issue about members receiving the full value of the benefit improvements granted in the previous financial year if, as intended, the trustees wound up the fund in the current financial year.

The fund was wound up with the members transferring into a number of accumulation funds.

Reasons for Decision

Section 5 of the Superannuation Contributions Tax (Assessment and Collection) Act 1997 (SCT) provides that the object of the SCT is to assess and collect surcharge on the surchargeable contributions of high income earners.

A high income individual is a person whose adjusted taxable income, as defined in section 43 of the SCT, exceeds the threshold set out in section 9 of the SCT.

Subsection 8(3) of the SCT provides that the surchargeable contributions for a financial year for 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.

Subsection 8(4) of the SCT provides that surchargeable contributions for the years ended 30 June 1997, 1998 and 1999 are to be calculated using the formula

Annual salary * notional surchargeable contributions factors


where notional surchargeable contributions factors are worked out in accordance with the method set out in Superannuation Contributions Rulings SCR 97/1.

Subsection 8(5) of the SCT, in conjunction with regulation 2L, subregulation 2M(3) and Schedule 2 to the Superannuation Contributions Tax (Assessment and Collection) Regulations 1997 (SCTR), sets out the method for calculating surchargeable contributions for the year ended 30 June 2000 and later financial years - either by using:

i)

the formula - annual salary x notional surchargeable contributions factor - where the notional surchargeable contributions factors are calculated in line with the standard set out in Superannuation Contributions Ruling SCR 97/1; or

ii)

the standard method set out in the SCTR.

The trustee's alternative method for calculating surchargeable contributions in the financial year ended 30 June 2001 ensures that any actual increase in benefits flowing from the benefit improvements in the financial year ended 30 June 1998 that have not previously been brought to account are:

iii)

calculated on a basis consistent with the principles in Superannuation Contributions Ruling SCR 97/1 and the SCTR;

iv)

now brought to account; and

v)

removes the need for the fund to submit a corrective statement for the previous financial year.

The Commissioner is of the view that reporting additional surchargeable contributions in the current financial year is the most practical result given:

vi)

there is an unresolved issue about whether members received the full value of the benefit improvements granted in the previous financial year prior to the fund being wound up in;

vii)

that significant additional costs will be incurred by the fund, the succeeding funds (that is, the funds to whom the members have moved) and the ATO if the fund was required to give a corrective statement for the previous financial year;

viii)

the fund is now wound up and the assets have been distributed to members by way of transfer to succeeding funds; and

ix)

additional surchargeable contributions not previously brought to account will now be brought to account, albeit in the current financial year.

Legislative References:
Superannuation Contributions Tax (Assessment and Collection) Act 1997
   section 5
   section 9
   section 43
   subsection 8(3)
   subsection 8(4)
   subsection 8(5)

Related Public Rulings (including Determinations)
Superannuation Contributions Ruling SCR 97/1

Keywords
Superannuation contributions tax
Superannuation provider - defined benefits
Surchargeable contributions
Actuarial value of benefits
Notional surchargeable contributions factor

Business Line:  Superannuation

Date of publication:  8 September 2001

ISSN: 1445-2782