When a member gives their TFN to their employer, the employer must pass it on to you.
If you don’t have a member's TFN, you may be liable for additional income tax of 34%. For the 2014-15, 2015-16 and 2016-17 income years only this is 34% due to the 2% for the Temporary budget repair levy. This tax is on top of the 15% tax you already paid on assessable contributions such as:
- contributions made by an employer on behalf of a member, including salary sacrifice contributions
- any part of a transfer from a foreign super fund that is assessable income of the fund.
For the 2017-18 income year and future years the temporary budget repair levy will be removed reducing the tax to 32%.
If your member hasn't quoted their TFN by the end of your income year and their account was opened:
- before 1 July 2007 – the assessable contributions will be taxed an extra 32% when those contributions exceed $1,000 in an income year (the extra tax is on all assessable contributions made in that income year, including the first $1,000)
- on or after 1 July 2007 – all the assessable contributions made during the income year will be taxed an extra 32%. For the 2014-15, 2015-16 and 2016-17 income years only this is increased to 34% due to the 2% for the Temporary budget repair levy.
The extra tax on these assessable contributions is in addition to the standard 15% rate of tax you pay on your taxable income.
Non-complying funds must pay an additional 4% tax (this rate includes the 2% temporary budget repair levy) on assessable contributions if a member has not provided their TFN.
This extra tax does not affect your PAYG instalment calculations. When calculating your PAYG instalments, don't include your:
- no-TFN-quoted contributions income
- tax offset for no-TFN-quoted contributions income.
We generally calculate instalment rates at 15% for complying funds and 45% for non-complying funds. If your circumstances mean you pay more or less than your expected income tax liability for the relevant income year, you can vary your instalments. For example, you may have non-arm's length income that is taxed at an additional 30% on top of the 15% rate of tax for assessable contributions.
You work out your liability for the additional tax at the end of the income year in which the contributions are made. Include contributions that are assessable income as no-TFN contributions income in your fund income tax return.
RSAs use the company income tax return, which does not have separate labels to report no-TFN quoted contributions, the no-TFN tax offset or interest on overpayments of no-TFN contributions income tax. For RSAs you will need to calculate these amounts and report them at the calculations statement of the company income tax return.
If you pay the additional tax and your member gives you their TFN later, you may be able to claim back the additional tax as a no-TFN tax offset in your next income tax return. You claim the tax offset in the income year in which the member first provides their TFN. However, you can only claim the no-TFN-quoted contributions income in the three income years before you received the member's TFN.
The tax offset can only be claimed for tax paid on no-TFN-quoted contributions income of an earlier year. You cannot:
- pay no-TFN-quoted contributions tax for a contribution, and
- claim a tax offset for that same contribution in the same income year.
If you would like to get the benefit of this offset sooner, you can adjust your PAYG instalments to reflect the fact that you will be entitled to the offset in your next income tax return.
If you have debited the amount of additional tax from your member, you should refund this money to their account.
The additional tax on no-TFN contributions applies if a member has not quoted their TFN by the end of the income year you accepted the contributions, even if the member leaves the fund in that year.
If the member has transferred their super to another fund, the original fund (not the new fund) must pay the tax. If the former member quotes their TFN to their former fund within three years of the end of the income year in which the no-TFN contributions were made, the former fund can claim a tax offset.
You may claim interest if all the following conditions are met:
- a member quoted their TFN to their employer before the end of an income year
- a member's employer failed to pass on the TFN to you when they made contributions on behalf of that member
- contributions you received then became part of your no-TFN-quoted contributions income
- the member quotes their TFN to you, resulting in an entitlement to a no-TFN quoted tax offset
- the no-TFN-quoted tax offset was applied against your income tax assessment.
You must self-assess any interest on no-TFN-quoted tax offset in the current year.
There is a label on the fund income tax return where you show the amount of interest on no-TFN-quoted tax offset claimed in the calculation statement.
You must hold evidence to support a claim for interest on no-TFN-quoted tax offset.
First, ask the member to provide a copy of the TFN declaration that they lodged with the employer who did not pass their TFN on to you.
If the member can't provide a copy of the TFN declaration, they can give you a statement that states:
- the name of the employer
- that the member gave the employer authority to pass their TFN on to you.
You should be able to provide us with evidence of the statement and show that it was made by the member – for example, by showing that an emailed statement came from the member's email address.
If you receive an oral statement by phone:
- use proof of identity procedures
- give them the option of giving you a copy of their TFN declaration, if they have one.
If they do not have a copy of their TFN declaration, you can obtain a statement from them that they gave their employer authority to pass on the TFN as set out above, and keep an adequate record as evidence.
The rate used in calculating the interest is set by law and is reviewed every quarter.
Interest on no-TFN-quoted tax offset is calculated as follows:
The interest-bearing tax is the amount of tax payable for the no-TFN-quoted contributions income that counted towards the tax offset.
If a payment of interest extends over two or more interest rate periods, you are required to calculate a separate interest entitlement for the number of days within each different rate period that the overpayment attracts interest.
Interest is payable to you, or an RSA provider, for the period that:
- starts on the later of the following days
- the day the amount of interest-bearing tax was paid
- the day the amount of interest-bearing tax was required to be paid, and
- ends on the day the assessment of the no-TFN-quoted tax offset is made.
All super and RSA providers are subject to a 'full' self-assessment system under which they self-assess the amount of tax they have to pay. The assessment is deemed to be made on the day you lodge your income tax return.
Secure Future is a complying super fund. It declares an amount of $10,000 at the 'No-TFN contributions income' label in its income tax return for the 2008–09 income year. An additional 31.5%** tax ($3,150) is payable on these no-TFN-quoted contributions.
The due date for lodgment of income tax returns for Secure Future is 31 March 2010, the due date for lodgment of 2008–09 income tax returns for funds with more than $2 million of income. This is also the due date for payment of tax for this return.
Secure Future is overdue in paying the total tax due. On 7 April 2010, it pays the full amount of tax owing, including the $3,150 tax on the no-TFN-quoted contributions.
In Secure Future's 2009–10 income year, Alana (a member of the fund) notices that her account was debited with $1,000 no-TFN-quoted contributions tax and so she provides her TFN to the fund. Alana advises Secure Future that she gave her TFN to her employer when she completed a TFN declaration on 10 September 2008 and she provides Secure Future with a copy of that TFN declaration.
In its income tax return for the 2009–10 income year, Secure Future claims $1,000 as a tax offset for part of the $3,150 tax paid on the no-TFN-quoted contributions of $10,000 reported in its 2009 income tax return.
Also, Secure Future claims interest of $46.12 on the interest-bearing tax of $1,000 for the period from 7 April 2010 (the day Secure Future paid the amount of interest-bearing tax) until 31 March 2011 (the day Secure Future lodges its 2010 income tax return and the day the assessment is deemed to be made).
The interest for this period is calculated as follows:
Interest on no-TFN-quoted tax offset =
07/04/2010 to 30/06/2010
85 x 4.16
01/07/2010 to 30/09/2010
92 x 4.80
01/10/2010 to 31/12/2010
92 x 4.74
01/01/2011 to 31/03/2011
90 x 5.02
Total interest payable
$9.69 + $12.10 + $11.95 + $12.38 = $46.12
**The tax rates in this example do not include the increase in the Medicare levy or the temporary budget repair levy.End of example
If you are a defined benefit fund, you are required to pay no-TFN contribution income tax.
If you have members who accrue benefits for the income year and they have not quoted their TFN, we will accept a reasonable method of calculating the amount of the no-TFN contributions income for the year.
Contributions income attributable to particular members, such as salary sacrifice contributions, can be determined to be no-TFN contributions income without difficulty. However, contributions that are not attributable to a particular member must be apportioned across all members of the fund on a reasonable basis – for example, by apportioning based on the super salaries of the members who have accrued benefits in the income year.
Without limiting acceptable methods, one way you could apportion the contributions income could be by basing it on the super salaries of the members who have accrued benefits in the income year.
Another acceptable method of apportionment would be using the amount of the members' notional tax contributions that is required to be calculated for defined benefit members for the purpose of the excess contributions tax.
A defined benefit fund has 10 members who have accrued benefits in the income year. One member, Mr X, has not quoted his TFN.
The fund receives $100,000 of contributions income for the income year. The fund calculates the 10 members' notional taxed contributions for the income year for the purposes of the excess contributions tax. The total of all of the 10 members' notional taxed contributions is equal to $140,000.
Mr X's notional taxed contributions are $7,000.
The fund's no-TFN-quoted contributions income is calculated as
$7,000/$140,000 x $100,000 = $5,000.