ATO Interpretative Decision
ATO ID 2003/830
Superannuation
Superannuation Contributions Surcharge - apportioning the surcharge liability of a deceased member of a Constitutionally Protected Fund to the member's beneficiariesFOI status: may be released
This ATOID provides you with the following level of protection:
If you reasonably apply this decision in good faith to your own circumstances (which are not materially different from those described in the decision), and the decision is later found to be incorrect you will not be liable to pay any penalty or interest. However, you will be required to pay any underpaid tax (or repay any over-claimed credit, grant or benefit), provided the time limits under the law allow it. If you do intend to apply this decision to your own circumstances, you will need to ensure that the relevant provisions referred to in the decision have not been amended or repealed. You may wish to obtain further advice from the Tax Office or from a professional adviser.
Issue
Can the surcharge debt be apportioned by the trustee of the super fund amongst two or more beneficiaries of a deceased member?
Decision
No, a surcharge debt can not be apportioned by the trustee of the super fund amongst two or more beneficiaries of a deceased member. Any surcharge liability payable would be assessed to the deceased member's estate. The trustee/executor of the estate would then distribute the remaining superannuation proceeds in accordance with the deceased's will.
Facts
A member of a Constitutionally Protected Fund (CPF) dies during the current year of income. He has surchargeable contributions reported by his CPF for the current year as well as a previous year of income.
There is more than one spouse (ie one legal spouse and one defacto) to whom the superannuation fund will pay benefits on the death of the member.
Reasons for Decision
Section 11 of the Superannuation Contributions Tax (Members of Constitutionally Protected Superannuation Funds) Assessment and Collection Act 1997 (SCT(CPF)A&C Act) provides that it is the member who is liable to pay the surcharge.
The Commissioner will assess a member for any surcharge liability for all financial years prior to the financial year in which the member dies. The assessed liability will be a debt of the member and the Commissioner will seek to recover from the member or the member's estate where the member has died without paying the surcharge liability.
The cap would also apply. If a member dies 'in office', the fund would report in line with subsection 15(6) of the SCT(CPF)A&C Act. The Commissioner would take this into account when calculating the amount required to be paid. The notice under subsection 15(7) of the SCT(CPF)A&C Act would be sent to the trustee/executor of the estate of the member.
There will be no liability on a surviving beneficiary (or beneficiaries) as there is no provision in the law to shift the surcharge liability to a beneficiary. However, there may be issues if the member's estate is distributed without taking account of the surcharge liability - in cases such as this, the Commissioner may have a claim against the trustee/executor of the deceased estate.
Date of decision: 8 September 2003Year of income: Year ended 30 June 2003
Legislative References:
Superannuation Contribution Tax (Members of Constitutionally Protected Superannuation Funds) Assessment and Collection Act 1997
Section 11
Subsection 15(6)
Subsection 15(7)
Keywords
Constitutionally protected superannuation funds
Superannuation contributions surcharge
Superannuation contributions tax
Date reviewed: 7 August 2018
ISSN: 1445-2782
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