ATO ID 2002/457: Payments for surcharge liabilities
Date of decision: 30 November 2001
Year of income: Year ending 30 June 2014
Business line: Superannuation

Issue
Is a payment made by a member to an unfunded defined benefits provider, for the purpose of reducing the debit balance of the member's surcharge debt account, deductible under section 290-150 of the Income Tax Assessment Act 1997 (ITAA 1997)?

Decision
No. A deduction is not available under section 290-150 of the ITAA 1997 for a payment made by a member for the purpose of reducing the debit balance of their surcharge debt account.

Facts
The member is a member of an unfunded defined benefits provider. The member expects that on retirement they will be paid a pension. The member received advice that the pension paid to them will be reduced to meet any outstanding superannuation surcharge liabilities. The member wishes to make advance payments to meet future superannuation surcharge liabilities.

Reasons for decision
Summary: Section 290-150 of the ITAA 1997 sets out the conditions to be met in order for a member to be able to claim a deduction for a superannuation contribution. Subsection 290-150(1) requires that the contribution is made for the purpose of providing superannuation benefits for the person (regardless of whether the benefits are payable to a SIS dependant if the person dies before or after becoming entitled to the benefits). A payment made for the purpose of reducing the debit balance of the member's surcharge debt account does not satisfy this criterion. Instead, it is viewed as a payment made for the purpose of reducing an accumulated surcharge liability. As an aside, section 26-60 of the Income Tax Assessment Act 1997 states that a deduction is not allowable in respect of a payment of a superannuation contributions surcharge liability.

Legislative references: Income Tax Assessment Act 1997 section 26-60 section 290-150
Subject references: Superannuation contributions Superannuation contributions surcharge Superannuation contributions - deductions & rebates Defined benefits superannuation fund