ATO ID 2001/538: Superannuation contributions surcharge - surchargeable contributions for the member of constitutionally protected superannuation fund
Date of decision: 1 August 2001
Business line: Superannuation

Issue
Was the superannuation contributions surcharge assessment for the member for the financial year correctly based on the surchargeable contributions reported by the superannuation provider, in accordance with the Superannuation Contributions Tax (Members of Constitutionally Protected Superannuation Funds) Assessment and Collection Act 1997 (SCT (CP) Act).

Decision
Yes. The superannuation contributions tax assessment for the member for the financial year was correctly based on the surchargeable contributions reported by the superannuation provider, in accordance with the Superannuation Contributions Tax (Members of Constitutionally Protected Superannuation Funds) Assessment and Collection Act 1997 (SCT(CP)A)?

Facts
The superannuation provider is a superannuation (unfunded defined benefits) provider and a constitutionally protected superannuation fund as defined by section 38 of the SCT(CP)A. The superannuation provider reported to the Commissioner an amount of surchargeable contributions for the member for the financial year. The Commissioner issued a superannuation contributions surcharge assessment to the member for the financial year. The Commissioner calculated the member's adjusted taxable income for the financial year to include the total surchargeable contributions reported by the superannuation provider for the year.

Reasons for decision
Summary: Under the provisions of the SCT(CP)A, constitutionally protected superannuation funds are certain superannuation providers which are listed in regulation 177 and schedule 14 to the Income Tax Regulations. Section 12 of the SCT(CP)A and the Income Tax Assessment Act 1936 requires constitutionally protected funds which are superannuation providers to report to the Commissioner after the end of the financial year statements in respect of each person who was a member of the fund including the member's surchargeable contributions. Under subsection 9(4) of the SCT(CP)A the surchargeable contributions for a financial year for a member of 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 of the financial year. These amounts are calculated by using the formula provided in subsection 9(6) of the SCT(CP)A. For each financial year in which a member has surchargeable contributions, section 14 of the SCT(CP)A requires the Commissioner to calculate the member's adjusted taxable income. Section 38 of the SCT(CP)A states that 'adjusted taxable income' has the same meaning as in the Superannuation Contributions Tax (Assessment And Collection) Act 1997 . The adjusted taxable income includes the member's taxable income plus their surchargeable contributions for the financial year. If the adjusted taxable income exceeds the surcharge threshold, the Commissioner must make an assessment of surcharge. In the case of a constitutionally protected fund, the surcharge liability rests with the member (section 11 of the SCT(CP)A). Under section 15 of the SCT(CP)A, the surcharge is payable at the time when the benefits become payable. Until such time, the Commissioner must keep a surcharge debt account to record any surcharge that is assessed for the member for each financial year. The Commissioner must also calculate interest on the balance of the member's surcharge debt account on 30 June each year. Interest is calculated at the 10 year Treasury bond rate. The member may arrange for early payments on a voluntary basis towards their surcharge debt account at any time. The Commissioner is then required to credit the payment to the member's surcharge debt account. The Commissioner received a statement from the provider in respect of the member for the financial year. The provider reported surchargeable contributions in respect of the member. The surcharge assessment issued to the member was based on the surchargeable contributions as reported to the Commissioner. If the provider reports a change to the surchargeable contributions previously reported, the Commissioner will re-calculate the member's adjusted taxable income. Under section 17 of the SCT(CP)A , the Commissioner may amend the assessments to take into account the change to the surchargeable contributions that were used to calculate the member's adjusted taxable income.

Legislative references: Superannuation Contributions Tax (Members Of Constitutionally Protected Superannuation Funds) Assessment And Collection Act 1997 subsection 9(4) subsection 9(6) section 12 section 14 section 15 section 38
Subject references: Defined benefit superannuation funds Adjusted taxable income Superannuation contributions surcharge Constitutionally protected superannuation funds