Q. A superannuation surcharge assessment was issued nearly 10 years after the relevant income year. In the interim the member, having reached preservation age, has taken his money out of the fund in a lump sum. Are there any time limitations for the assessment?
All legislative references are to the Superannuation Contributions Tax (Assessment and Collection) Act 1997 (SCT (A&C) Act) unless specified otherwise.
Assessments of superannuation contributions surcharge
The superannuation contributions surcharge is imposed by the Superannuation Contributions Tax Imposition Act 1997 (SCT Imposition Act). The Superannuation Contributions Tax (Assessment and Collection) Act 1997 (SCT (A&C) Act) provides for the assessment and collection of the surcharge.
Although the superannuation contributions surcharge only applied for the 1997/98 to the 2004/05 years of income and has been abolished for contributions made after 30 June 2005, the surcharge imposition and assessment Acts remain in force to allow the Commissioner to continue to issue assessments for 2004/05 and earlier financial years and to collect outstanding surcharge liabilities, including debts outstanding in surcharge debt accounts.
Under the SCT (A&C) Act, the Commissioner of Taxation can make an assessment of surcharge at any time.
The SCT (A&C) Act provides that, for each financial year in which there are surchargeable contributions for a member (as reported to the Commissioner of Taxation by the superannuation provider), the Commissioner must calculate the member’s adjusted taxable income and, if the adjusted taxable income is more than the surcharge threshold:
- calculate the surchargeable contributions of the member in that year
- calculate the rate of surcharge, and
- specify the amount of surcharge payable (including a nil amount) (SCT(A&C) Act s 15).
If the adjusted taxable income is equal to or less than the surcharge threshold for the financial year, the assessment must state that a nil amount of surcharge is payable.
An assessment of surcharge is taken not to have been made if, after the assessment was made, the provider ceased to be the holder of the contributions or began to pay a pension or annuity based on the contributions, and a copy of the assessment was not given to the provider before it ceased to hold the contributions or began to pay the pension or annuity (SCT (A&C) Act s 15(5)).
An assessment is also taken not to have been made if, after the death of a member, an assessment was or is made in relation to the financial year in which the member died, or a later financial year.
When an assessment is made, the Commissioner must give a copy to the person to whom it is directed, and must also give the member a notice explaining the calculations on which the assessment was based (thus allowing a member or superannuation provider to object if dissatisfied).
ATO guidelines
The ATO document The superannuation contributions surcharge (www.ato.gov.au/content/downloads/n15264.pdf) provides the guidelines below that are relevant:
Accumulation funds and funded defined benefit funds The person or provider holding the surchargeable contributions at the time the surcharge is assessed needs to pay us (the ATO) the surcharge.
If the provider is holding the contributions when they receive the surcharge assessment, the provider will pay the surcharge on their member’s behalf.
If the surchargeable contributions were transferred to another superannuation provider before the original provider received a surcharge assessment, the original provider is not liable to pay the surcharge assessment. The transferee provider will be assessed to pay the surcharge.
If the surchargeable contributions were paid to the member as a lump sum or pension before we issued the surcharge assessment, the member is assessed and is required to pay the surcharge.
If a provider receives an assessment, and no longer holds the individual’s surchargeable contributions, they should send us a Superannuation assessment variation advice statement (AVA) (NAT 2626) (www.ato.gov.au/content/downloads/SPR25108n2626.pdf).
Note that this response does not cover amendment of assessments or objections to assessments under the SCT(A&C) Act or Pt IVC of the Taxation Administration Act 1953 (TAA). [18-05-2012]
