ATO ID 2003/831: Superannuation Contributions Surcharge - surcharge liability upon death of a member of a Constitutionally Protected Fund
Date of decision: 8 September 2003
Year of income: Year ended 30 June 2003
Business line: Superannuation

Issue
Does a surcharge liability still exist in respect of a deceased member of a Constitutionally Protected Fund (CPF)?

Decision
Yes, surcharge is payable in respect of a deceased member of a CPF, except for the financial year in which the member dies (or later years)

Facts
A member of a Constitutionally Protected Fund dies during the current year of income. He has surchargeable contributions reported by his CPF for the current year as well as a previous year of income.

Reasons for decision
Summary: Section 11 of the Superannuation Contributions Tax (Members of Constitutionally Protected Superannuation Funds) Assessment and Collection Act 1997 (SCT(CPF)A&C Act) provides that it is the member who is liable to pay the surcharge. The section also provides that surcharge is not payable on surchargeable contributions in the financial year in which a member dies, or in future years. The Commissioner will assess a member for any surcharge liability for all financial years prior to the financial year in which the member dies. The assessments may issue after the date of death (if, for example, the Commissioner could not determine adjusted taxable income because the member's income tax returns may not be lodged until after the date of death). The assessed liability will be a debt of the member and the Commissioner will seek to recover from the member or the member's estate where the member has died without paying the surcharge liability. The cap would also apply. If a member dies 'in office', the fund would report in line with subsection 15(6) of the SCT(CPF)A&C Act. The Commissioner would take this into account when calculating the amount required to be paid. The notice under subsection 15(7) of the SCT(CPF)A&C Act would be sent to the trustee/executor of the estate of the member.

Legislative references: Superannuation Contribution Tax (Members of Constitutionally Protected Superannuation Funds) Assessment and Collection Act 1997 Section 11 Subsection 15(6) Subsection 15(7)
Subject references: Constitutionally protected superannuation funds Superannuation contributions surcharge Superannuation contributions tax