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ATO Interpretative Decision

ATO ID 2001/461 (Withdrawn)

Superannuation

Superannuation - Request for Approval of Another Method for Surcharge Calculations
FOI status: may be released
  • This ATO ID is withdrawn because it only applies to surchargeable contributions for the specified members for financial years from 2000-01 up to and including 2002-03. Additionally, superannuation contributions surcharge is not payable on surchargeable contributions for financial years after the 2004-05 financial year. Despite its withdrawal, this ATO ID is still a precedential view for the specified members for financial years from 2000-01 up to and including 2002-03.
    This document incorporates revisions made since original publication. View its history and amending notices, if applicable.

CAUTION: This is an edited and summarised record of a Tax Office decision. This record is not published as a form of advice. It is being made available for your inspection to meet FOI requirements, because it may be used by an officer in making another decision.

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you will need to ensure that the relevant provisions referred to in the decision have not been amended or repealed.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

Does the Commissioner approve another method for the calculation of surchargeable contributions, for members of a funded defined benefits scheme receiving untaxed benefits.

Decision

Yes. The Commissioner approves another method for calculating surchargeable contributions for each of the years ended 30 June 2001, 2002 and 2003 for members receiving untaxed defined benefits.

The method approved is for surchargeable contributions for these members to be calculated as if they are being paid by an unfunded defined benefits scheme (that is, that they be permitted to ignore those aspects of the formula set out in Schedule 2 to the Superannuation Contributions Tax (Assessment and Collection) Regulations 1997 that relate to funded benefits).

Facts

The scheme is a funded defined benefits superannuation scheme that was formerly unfunded.

Defined benefits members receive untaxed benefits.

Reasons for Decision

Subsection 8(3) of the Superannuation Contributions Tax (Assessment and Collection) Act (SCTA) provides that:

"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 and risk benefits provided in respect of, the member for the financial year."

Subsection 8(5) of the SCTA provides the method to be used when calculating the actuarial value 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 as:

"(a)
the method set out in the regulations, ... ; or
(b)
if the Commissioner approves in writing another method as being appropriate in relation to the member for the financial year, ... , the method so approved."

The standard method for working out the amount of surchargeable contributions set out in the formula in Schedule 2 to the Superannuation Contributions Tax (Assessment and Collection) Regulations 1997 (SCTR) requires funded benefits to be divided by 0.85.

The scheme has only recently become funded and the benefit design, which has been maintained, is extremely complex. This makes it difficult to make changes that either do not impose additional costs on the employer or disadvantage some members of the scheme.

The Commissioner is of the view that the benefit issues need to be addressed by the scheme trustees and is prepared to agree to another method for calculating the surchargeable contributions of those members receiving untaxed benefits for an interim period to allow the trustees sufficient time to address those issues.

The other calculation method is only approved for calculating surchargeable contributions of defined benefit members who receive untaxed benefits for each of the years ended 30 June 2001, 2002 and 2003. The Commissioner requires the method specified under the SCTR to be used for all other members and for all members for the year ended 30 June 2004 and future financial years.

Date of decision:  3 September 2001

Year of income:  Year ended 30 June 2001, year ending 30 June 2002 and year ending 30 June 2003

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

Keywords
Precedent
Superannuation contributions tax
Superannuation provider - defined benefits
Superannuation contributions surcharge
Surchargeable contributions
Actuarial value of benefits

Business Line:  Superannuation

Date of publication:  11 October 2001

ISSN: 1445-2782

history
  Date: Version:
  3 September 2001 Original statement
You are here 19 February 2010 Archived

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