Bills Digest No. 63   1997-98 Superannuation Contributions and Termination Payments Taxes Legislation Amendment Bill 1997


Numerical Index | Alphabetical Index

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

Passage History

Superannuation Contributions and Termination Payments Taxes Legislation Amendment Bill 1997

Date Introduced: 2 October 1997
House: House of Representatives
Portfolio: Treasury
Commencement: Royal Assent for the Act and 5 Jun 1997 for schedules 3,5, 9 and items 1 and 2 and 4 to 45 of Schedule 4

Purpose

To amend various Acts in relation to superannuation contributions taxes and termination payments taxes.

Background

The reader is referred to the Digest for the Superannuation Contributions Tax (Members of Constitutionally Protected Superannuation Funds) Assessment and Collection Bill 1997.

Main Provisions

This Bill makes a number of consequential amendments to nine Acts which are found in the following Schedules:

  • Schedule 1 - Amendments of the Income Tax Assessment Act 1936
  • Schedule 2 - Amendments of the Income Tax Assessment Act 1997
  • Schedule 3 - Amendments of the Superannuation Contributions Tax (Application to the Commonwealth) Act 1997
  • Schedule 4 - Amendments of the Superannuation Contributions Tax (Assessment and Collection) Act 1997
  • Schedule 5 - Amendments of the Superannuation Contributions Tax (Consequential Amendments) Act 1997
  • Schedule 6- Amendments of the Superannuation Industry (Supervision) Act 1993
  • Schedule 7 - Amendments of the Superannuation (Resolution of Complaints) Act 1993
  • Schedule 8 - Amendments of the Taxation (Interest on Overpayments and Early Payments) Act 1983
  • Schedule 9 - Amendments of the Termination Payments Tax (Assessment and Collection) Act 1997

The amendments to these Acts are required as a consequence of the introduction of the Superannuation Contributions Tax (Members of Constitutionally Protected Funds) Assessment and Collection Bill 1997 and the Superannuation Contributions Tax (Members of Constitutionally Protected Funds) Imposition Bill 1997 .

Schedule 1 - Amendments of the Income Tax Assessment Act 1936

Item 1 amends the definition of 'eligible termination payment' which includes any payments received from a complying superannuation fund.The definition is being amended to ensure that an amount received from the commutation of a pension from a constitutionally protected superannuation fund solely to pay a superannuation contributions surcharge is not included in assessable income.

Item 3 redrafts subsection 202DJ(1) of the 1936 Act to ensure that, where a person has quoted his or her TFN to a superannuation provider for the purpose of calculating the tax to be deducted from an Eligible Termination Payment (ETP), that the TFN will be taken to have also been quoted for the purposes of the Superannuation Contributions Tax (Members of Constitutionally Protected Superannuation Funds) Assessment and Collection Act 1997.

Item 4 inserts in subsection 202DJ(2) the definition of a 'constitutionally protected superannuation fund' which has the same meaning as the same term in Part IX of the 1936 Act.

Item 5 amends paragraph 214A(2)(f) to include a reference to section 18 of the Superannuation Contributions Tax (Members of Constitutionally Protected Superannuation Funds) Assessment and Collection Act 1997 so that the rate of interest calculated for the surcharge for protected funds refers to section 214A of the 1936 Act.

Schedule 2 - Amendments of the Income Tax Assessment Act 1997

Items 1 & 2 ensure that the payment of the superannuation contributions surcharge is not an allowable deduction under the Income Tax Assessment Act 1997 (the 1997 Act) in relation to the following Acts:

  • Superannuation Contributions Tax (Assessment and Collection) Act 1997;
  • Superannuation Contributions Tax (Members of Constitutionally Protected Superannuation Funds) Assessment and Collection Act 1997;
  • Termination Payments Tax (Assessment and Collection) Act 1997.

Schedule 3 - Amendments of the Superannuation Contributions Tax (Application to the Commonwealth) Act 1997

Items 1 & 2 make a technical amendment to remove any doubt that the Superannuation Contributions Tax (Assessment and Collection) Act 1997 applies to superannuation funds administered by the Commonwealth.

Schedule 4 - Amendments of the Superannuation Contributions Tax (Assessment and Collection) Act 1997

Item 1 clarifies the Superannuation Contributions Tax (Assessment and Collection) Act 1997 (the 1997 Act) to ensure that for an unfunded defined benefits scheme, the surcharge is not payable until the benefit becomes payable.

Item 3 amends section 7 to provide that no surcharge is payable under the 1997 Act where the surcharge is payable under the Superannuation Contributions Tax (Members of Constitutionally Protected Superannuation Funds) Assessment and Collection Act 1997 and ensures that there is no possibility of double taxation in the unlikely circumstance when both assessment and collection Acts could apply to a constitutionally protected fund.

Item 4 amends subsection 8(1) to clarify the basis of calculation of surchargeable contributions for accumulation schemes and for defined benefits schemes. Accumulation schemes are based on the amounts actually paid, defined benefits schemes are based on annual salaries multiplied by the notional surchargeable contributions factor.

Items 5 and 6 amend subsection 8(2) which determines the amount of surchargeable contributions for a member of an accumulation fund, so that any allocated surplus amount for a member is included in the member's surchargeable contributions.The definition of 'allocated surplus amount' is inserted in the definitions under section 43. (Item 40) Subsection 8(3) determines the amount of surchargeable contributions for a defined benefits fund based on a 'notional surchargeable contributions factor' defined in section 43.Item 45 amends the definition for unfunded defined benefits schemes that do not actually receive any contribution in a financial year, because, for example, the scheme is on a contributions holiday.

Items 5,6,7, and 9 make amendment to ensure that defined benefit superannuation fund providers, as their accumulation benefit superannuation counterparts, are required to report 'surchargeable contributions' for a member.Item 41 makes appropriate amendment to the definition of 'contributed amounts'.

Item 25 amends subsections 17(2) and 17(3) dealing with credits or refunds of advance instalment and ensures that the advance instalment is first used to reduce any surcharge liabilities the provider may have under the 1997 Act before an amount is refunded to the provider.

Items 26 to 28 deal with amendment of assessments and allows the Commissioner more scope to make amendments in certain situations.

Item 29 deals with assessments of additional surcharge and makes an amendment to ensure that the amount of any reduction in the surcharge is first used to reduce any surcharge liabilities the holder may have under the 1997 Act before an amount is refunded to the provider.

Item 30 deals with late payment under section 25 of the 1997 Act and makes amendmentsfor consistency with other taxing provisions.The late payment penalty interest will be based on the rate provided for by section 214A of the Income Tax Assessment Act 1936, and is based on the 13 week Treasury Bond rate accruing on a daily basis.The amendment will also provide for judgment to be made in respect of the debt and the Taxation Commissioner to sue for the recovery of any unpaid amounts.

Item 33 inserts new proposed section 34A to ensure that the Act does not apply to a person who is a judge of a Territory at the commencement of the Superannuation Contributions Tax (Assessment and Collection) Act 1997.

Item 34amends section 35 so that a superannuation provider must give the Commissioner a statement setting out such information required by the regulations, and provides for a penalty if no information is given.Also, a new proposed section 35A is inserted which provides for the Taxation Commissioner to serve a contravention notice on a provider who has contravened the provisions dealing with the provision of information.

Item 37 inserts new proposed section 40A which deals with the Commissioner's power to collect funds held for or on behalf of a holder of surchargeable contributions to meet a surchargeable liability.

Item 38 substitute new proposed section 42 to provide that the general regulation making power extends to the manner in which statements are to be provided to the Taxation Commissioner and allows regulations to prescribe a penalty for offences against the regulations.

Items 39 to 44 make various amendments to the definitions.

Schedule 5 - Amendments to the Superannuation Contributions Tax (Consequential Amendments) Act 1997

Items 1 to 18 simply correct cross-references in the Act that refer to provisions in the Retirement Savings Accounts Act 1997.The latter Act was renumbered in the Parliament and these amendment simply reflect that renumbering.

Schedule 6 - Amendments of the Superannuation Industry (Supervision) Act 1993

Item 1 is a technical amendment which is made to this Act to insert an appropriate reference to the Superannuation Funds (Members of Constitutionally Protected Superannuation Funds)Assessment and Collection Act 1997 in the definition of 'Surcharge Acts' in section 299W.

Schedule 7 - Amendments of the Superannuation (Resolution of Complaints) Act 1993

Items 1 and 3 are amendments of a technical nature to insert appropriate references to the Superannuation Funds (Members of Constitutionally Protected Superannuation Funds)Assessment and Collection Act 1997 in subsection 3(2) and section 15CA.

Item 2 amends subsection 15CA(1) to remove a reference to 'contributed amounts' which is no longer appropriate.

Schedule 8 - Amendments of the Taxation (Interest on Overpayments and Early Payments) Act 1983

Item 1 inserts new Part IIE into the Act to enable interest to be paid on overpayments resulting from amendments to surcharge assessments made under the Superannuation Funds (Members of Constitutionally Protected Superannuation Funds)Assessment and Collection Act 1997.The amendments require the Taxation Commissioner to pay interest where a person who has paid their surcharge and then the surcharge liability has been reduced.

Schedule 9 - Amendments of the Termination Payments Tax (Assessment and Collection) Act 1997

Item 1 deals with amendments of surcharge assessments and redrafts subsection 12(4) to ensure that :

  • an amount can be credited to the taxpayer even where the total amount previously assessed to be paid has not been paid; and
  • any excess amount is to be applied to reduce any surcharge liability the taxpayer may have under the Act before an amount is refunded to the taxpayer.

Item 2 deals with late payment penalty under section 16 of the Act and is amended to make it consistent with other taxing provisions.The late payment penalty interest will be based on the rate provided for by section 214A of the Income Tax Assessment Act 1936, and is based on the 13 week Treasury Bond rate accruing on a daily basis.The amendment will also provide for judgment to be made in respect of the debt and for the Taxation Commissioner to sue for the recovery of any unpaid amounts.

Item 6 inserts new section 28A which deals with the Commissioner's power to collect funds held for or on behalf of a holder of surchargeable contributions to meet a surchargeable liability.

Item 7 provides a technical amendment to the definition of 'termination payments surcharge or surcharge'.

Contact Officer and Copyright Details

John Harrison
24 October 1997
Bills Digest Service
Information and Research Services

This paper has been prepared for general distribution to Senators and Members of the Australian Parliament. While great care is taken to ensure that the paper is accurate and balanced, the paper is written using information publicly available at the time of production. The views expressed are those of the author and should not be attributed to the Information and Research Services (IRS). Advice on legislation or legal policy issues contained in this paper is provided for use in parliamentary debate and for related parliamentary purposes. This paper is not professional legal opinion. Readers are reminded that the paper is not an official parliamentary or Australian government document.

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 1328-8091
© Commonwealth of Australia 1997

Except to the extent of the uses permitted under the Copyright Act 1968, no part of this publication may be reproduced or transmitted in any form or by any means, including information storage and retrieval systems, without the prior written consent of the Parliamentary Library, other than by Members of the Australian Parliament in the course of their official duties.

Published by the Department of the Parliamentary Library, 1997.

This page was prepared by the Parliamentary Library, Commonwealth of Australia
Last updated: 27 October 1997

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