WARNING:
This Digest was prepared for debate. It reflects the legislation as
introduced and does not canvass subsequent amendments. This Digest
does not have any official legal status. Other sources should be
consulted to determine the subsequent official status of the
Bill.
CONTENTS
Termination Payments Surcharge (Assessment and
Collection) Bill 1997
Date Introduced: 13 February 1997
House: House of Representatives
Portfolio: Treasury
Commencement: Royal Assent
To provide for the assessment and collection of a 'surcharge' on
termination payments that will be payable by a taxpayer where there
income exceeds $70 000.
The reader is referred to the Digest for the Superannuation
Contributions Surcharge (Assessment and Collection) Bill 1997.
For termination payments made before 20 August 2001, the
surcharge will apply to the financial year commencing on 1 July
1996. Effectively the surcharge will apply to termination payments
made after 7.30 pm on 20 August 1996 (the time of the Budget
announcement)(clause 7).
Transitional arrangements will apply to termination payments
made before 20 August 2001, so that only that part of the
termination payment relating to service after the announcement of
the surcharge will be liable. For termination payments made on or
after 20 August 2001, the surcharge will apply to the entire
termination payment, including service prior to that date. It may
be argued that this measure as it applies to entitlements accrued
before the announcement is retrospective (clause
9).
The surcharge threshold will be $70 000 for 1996-97 and this
amount will be indexed on the movement of the Australian
Statistician's estimate of full-time adult average weekly ordinary
time earnings, rather than the Consumer Price Index. The indexation
factor will be calculated on such movements from March to March
each year (clause 10).
Who is liable to pay the surcharge is dealt with in
clause 8. The surcharge is payable on any
termination payments made to or for a taxpayer. The taxpayer is
liable for the surcharge. The surcharge is only payable if a
taxpayer's assessable income and superannuation contributions for a
financial year is greater than the surcharge threshold for that
year. In addition, the surcharge will not be payable by residents,
companies and trustees that reside in a Territory for the purposes
of Division 1A of Part III of the Income Tax Assessment Act
1936(ITAA) (such Territories are the external Territories and,
depending on certain provisions of the ITAA, are Norfolk Island,
the Cocos (Keeling) Islands and Christmas Island).
The Commissioner of Taxation (the Commissioner) is to assess any
amount of surcharge that is payable in respect of a financial year
and the assessment is to include the total amount of surcharge
payable. The surcharge will generally be payable within 1 months of
the assessment being made. Notice of an assessment is to be given
to the taxpayer (clause 11).
If an assessment of surcharge is amended, the assessment of the
amount of surcharge is to be amended to reflect the new assessment
of income (clause 12). If an assessment is amended
or a new assessment is issued and this results in a higher
surcharge liability, the person will also be liable to interest on
the difference between the originally assessed surcharge and the
newly assessed surcharge. The rate of interest will be based on the
rate payable under the ITAA (clause 13).
Clause 14 will allow the Commissioner to use a
person's TFN that has been supplied under a law relating to
superannuation or taxation for the administration of the Bill.
The remainder of the Bill deals with administrative, rather than
policy, matters. More important matters relate to:
- the recovery of unpaid surcharge, or advance instalments, and
the imposition of a penalty charge on bodies that fail to comply
with the remittance requirements (clause 16);
- the recovery of unpaid surcharge, which will be considered to
be a debt to the Commonwealth and so recoverable in a civil action
(clause 17);
- the review of decisions made by the Commissioner, which, in
accordance with normal legislative provisions, provide for an
internal review of the decision and review by the Administrative
Appeals Tribunal (clause 20) (the review of such
decisions may also be subject to review by the Federal and High
Courts); and
- the administration of the scheme will be vested in the
Commissioner of Taxation and an annual report on the operation of
the proposed Act is to be delivered (clauses 21 and
22).
Chris Field
Ian Ireland
3 April 1997
Bills Digest Service
Information and Research Services
This Digest does not have any official legal status. Other
sources should be consulted to determine whether the Bill has been
enacted and, if so, whether the subsequent Act reflects further
amendments.
IRS staff are available to discuss the paper's contents
with Senators and Members and their staff but not with members of
the public.
ISSN 1323-9031
© Commonwealth of Australia 1996
Except to the extent of the uses permitted under the
Copyright Act 1968, no part of this publication may be
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of the Australian Parliament in the course of their official
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Published by the Department of the Parliamentary Library,
1997.
This page was prepared by the Parliamentary Library,
Commonwealth of Australia
Last updated: 10 April 1997
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