ATO ID 2006/5: Superannuation Contributions Surcharge: constitutionally protected superannuation funds and interest on overpayment
Date of decision: 24 February 2004
Year of income: Year ended 30 June 2002
Business line: Superannuation

Issue
Is the taxpayer, a member of a constitutionally protected superannuation fund (CPF), entitled to interest on overpayment under Part IIE of the Taxation (Interest on Overpayments and Early Payments) Act 1983 (IOP Act) in relation to a payment made in respect of a superannuation contributions tax (surcharge) assessment which was later amended, resulting in a lower surcharge liability?

Decision
No. No interest is payable under Part IIE of the IOP Act in this case.

Facts
In accordance with section 14 of the Superannuation Contributions Tax (Members of Constitutionally Protected Superannuation Funds) Assessment and Collection Act 1997 (SCT(CP) Act ), in February 2003 the Commissioner of Taxation issued a surcharge assessment for the year ended 30 June 2002 in respect of the surchargeable contributions of the CPF member. The resulting surcharge liability was debited to the surcharge debt account for the member under subsection 15(3) of the SCT(CP) Act. Under subsection 15(9) of the SCT(CP) Act, the member made a payment to the Commissioner in order to reduce to nil the debit balance of the surcharge debt account. In November 2003, the Commissioner amended the surcharge assessment for the year ended 30 June 2002, reducing the surcharge liability for that year. As a result, the member became entitled to a refund of the difference between the amount already paid and the amended (lower) surcharge liability. No benefits had been payable to the member by the CPF, no 'splittable payments' were payable, and the CPF did not cease to be a CPF at any time before the amended assessment was issued.

Reasons for decision
Summary: Part IIE of the IOP Act provides for the payment of interest by the Commissioner on an overpayment of surcharge where an assessment made under the SCT(CP) Act is amended to reduce the surcharge liability. In particular, section 8V of the IOP Act states: If: (a) an assessment is made under the Superannuation Contributions Tax (Members of Constitutionally Protected Superannuation Funds) Assessment and Collection Act 1997 in respect of a person's liability to pay superannuation contributions surcharge; and (b) the person has paid the assessed amount of the surcharge; and (c) the assessment is amended (otherwise than under section 16 of that Act) reducing the liability of the person to pay surcharge; The period in which interest is payable is determined by section 8W of the IOP Act which states: The interest is payable for the period that: (a) started on the later of the following days: (i) the day on which the amount of the surcharge was paid; (ii) the day by which the amount of the surcharge was required to be paid; and Section 15 of the SCT(CP) Act prescribes the timing in which the surcharge liability becomes payable in respect of the surchargeable contributions of a member of a CPF. This section is significant for interpreting the phrase 'the day by which the amount of the surcharge was required to be paid' as used in subparagraph 8W(a)(ii) of the IOP Act. Importantly, section 15 of the SCT(CP) Act makes provision for the deferral of surcharge liability. Subsection 15(8) provides that the liability is not required to be paid until three months after the date of issue of a notice given by the Commissioner under subsection 15(7). Subsection 15(7) of the SCT(CP) Act states that the Commissioner must give the CPF member a notice, stating that the member is liable to pay an amount of surcharge, if a member becomes liable to pay an amount due to: None of the above scenarios had occurred before the amended surcharge assessment issued in November 2003. For the purposes of subparagraph 8W(a)(ii) of the IOP Act, the day by which the surcharge is required to be paid is three months after the date of issue of a notice given under subsection 15(7) of the SCT (CP) Act. While the member paid an amount to reduce the surcharge debt account, section 8W of the IOP Act states that the period for which interest is paid starts on the later date of when the surcharge was paid or the day by which the amount of the surcharge was required to be paid. Due to the operation of section 8W of the IOP Act, as the required payment date did not occur before the day on which the assessment was amended, there is no period for which interest is payable.

Legislative references: Superannuation Contributions Tax (Members of Constitutionally Protected Superannuation Funds) Assessment and Collection Act 1997 section 14 section 15 subsection 15(3) subsection 15(6) subsection 15(6AA) subsection 15(6A) subsection 15(7) subsection 15(8) subsection 15(9)
Related ATO interpretative decisions: ATO ID 2005/279
Subject references: Superannuation Superannuation contributions surcharge Superannuation contributions tax Interest on overpayment Constitutionally Protected Superannuation Funds Amendment of assessment